Multiplex Opportunity. Help me analyze this deal!

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*This link comes directly from our calculators, based on information input by the member who posted.

I have been in touch with the listing agent for this property and was actually the first to view it. The original list price was $125k, but the seller has offered me $10k off or $10k repair credit. He has stated that he would prefer a cash sale and does not sound open to any sort of creative financing ( I believe he may have his mortgage bundled with a second property).

This property is currently at 100% occupancy. Three units at $500/mo each.

Is there another way to approach this or should I move on?

For background information, I have a current FHA mortgage on the home I live in for $146k that I purchased in June of 2018 and access to $10k cash.

I just closed on a house in Illinois last week for $4,300 with an as-is value of $35-40k. This is rented out as of Dec. 1 for $475/mo with a term of 3 years.

Any advice is most welcome.
Thank you,

You need to re-run your analysis, @Corey Nielsen . You've got a 33% vacancy rate and didn't include water/sewter, lawn care/snow removal, or management.

7% on your mortgage is crazy high in today's environment.

As far as financing, any way to pull some equity out of the Illinois rental?

With the 33%, I was trying to represent 1 unit empty since it’s a 3-plex. Now that I think about it, you’re right. Should that be around 10% then?

All utilities and lawn care/snow removal are done by tenant. 

i came up with 7% interest based on my personal mortgage for my house being at 4.25%. I thought an investment property would be higher than this.

My father is in Illinois and is helping me manage the property there. He is currently looking at options for pulling out the equity in that, but it is my understanding that a cash-out-refi is typically after 6-12 months? We’ll see what he comes up with though.

I will re-run the numbers as you suggest. Is there anything else worth including in the analysis? Thank you for the input!

@Corey Nielsen Capex and insurance seems very low for a three unit. Management fee - even if self-managing, typically want to include it in calculation? Vacancy is VERY conservative and 7% interest is high as mentioned previously.

@Christian Rojmar

How would I come up with a reasonable amount for CapEx and insurance for analysis sake?

Is there a formula for this or do you shop around for policy quotes? It’s the little things like that I am unsure about.

I have re-run the report with 10% vacancy, 5.5% interest rate, and 11% management. I also put in an ARV of $150k for an approximation.

@Corey Nielsen , a lot of people use 15%ish for CapEx and repairs (I have a spreadsheet with $ numbers based on various costs which will fluctuate based on age of property etc.), 10% for management, and 1 month of vacancy (8.5% but 10% may be better for multi - I am not super familiar with numbers on multi). As for insurance, to get a good approximation, best thing is to call around and get quotes. Is the property in a flood zone or not (makes a big difference). $50 just seems low to me for a triplex but it may not be...