First Purchase, Alaska 4-Plex
Greetings Compatriots!
This is my first post, my first purchase, my first foray into real estate investing.
AND I AM TERRIFIED EXCITED!!!
I would love to hear any input from the sages here and become an active member of the community. My goals with investing are to create a 6 figure cash flow after all expenses (including mortgage, insurance, vacancy, etc).
I live in a remote village in the Bush of Alaska. I do not know if I will be here long term and there are numerous complexities in attempting to acquire and maintain property here, so I've decided to invest remotely. Because of this, I feel that I need to utilize a property manager.
I am purchasing a 4-plex in Anchorage, Alaska. I would rate the neighborhood as C, it reminds me of the places that I lived in college. The list price was $350,000 we negotiated down to $330,000 (This should satisfy the 1% rule, I am still trying to get a good enough feel for the numbers to not utilize this as a crutch). There is some CapEx that I'll need to put in come Summer, but nothing structural or safety related. The inspector said, "I would buy this property."
I utilized a spreadsheet from Roofstock to help organize the numbers. I am hoping that I’m being sufficiently conservative, but I am hoping that I can realize more cash flow than this for such a substantial outlay of cash.
Income | Month | Annual | Assumption | |
Rent | $3,450.00 | $41,400 | ||
Vacancy Factor | $172.50 | $2,070 | 5.0% | |
Expected Rent | $3,277.50 | $39,330 | ||
Expenses | Month | Annual | % effective rent | |
Prop Taxes | $385.00 | $4,620 | 11.7% (Actual) | |
PM Fees | $262.20 | $3,146 | 8.0% (Calculated) | |
Leasing Fee | $81.94 | $983 | 2.5% (Calculated) | |
Prop Insurance | $222.83 | $2,674 | 11.7% (Actual) | |
Repairs & Maint | $180.26 | $2,163 | 5.5% (Calculated) | |
Cap Ex Reserve | $172.50 | $2,070 | 5.0% (Calculated) | |
Utilities (Avg) | $600.00 | $7,200.00 | 18.31% (Actual) | |
Total | $1,904.73 | $22,857 | 62.75% | |
Reserves | Month | Annual | Assumption (% effective rent) | |
Turnover Reserves | $213.04 | $2,556 | 6.5% | |
Debt Servicing | Month | Annual | ||
Mortgage | $1,070.43 | $12,845 | ||
Cash Flow | Month | Annual | ||
Unlevered CF | $1,159.73 | $13,917 | Income - Expenses | |
Levered CF | $89.30 | $1,072 | Income - Expenses - Debt Servicing | |
Net Operating Income | Month | Annual | ||
$1,372.77 | $16,473 |
I’d love to hear your thoughts and I am hoping to improve my ability to analyze and execute on increasingly profitable deals.
Thank you for reading!