Anyone willing to help a newbie with her MFH analysis?

Question

Hi BP! Found a multifamily in a B- area of Philadelphia that I really like - mind taking a look at my analysis and letting me know if you think it's worth it?

• Price: $230,000 (seller is giving me a $3,500 credit toward closing costs)
• Total projected income: $2,300/month after accounting for 1 month vacancy per year
• PITI: $1,570/month
• Water/Waste: $175/month
• Maintenance/CapEx: $375/month
• $2,300 - $1,570 - $175 - 375 = $180 cashflow/month

I'll probably have to put in about $15,000 of improvements/upgrades to install central air/heating and submetering the gas lines before it's 100% ready for tenants.

Paul Timmins · Answer

@Christina Lang

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it. Philly is a strong market for student housing.

Paul

Jay Dewberry · Answer

I would tend to agree with @Matthew Cole on this one. But that would depend on your long term goals. However you're getting around $60/door which is still positive cashflow. Try checking recent sales of triplexes in the area for ARV numbers. However a better way would be to have an agent run a CMA (Comparative Market Analysis) for your area. If all goes well, perhaps there's some good equity in the property.

Christina Lang · Answer

@Jay Dewberry There are three units. I will be living in one of the units and self-managing. Question - how do you calculate ARV post-renovation?

@Matthew Cole Thanks Matt - would the fact that I am house-hacking and living in one of the units change your opinion at all?

Jay Dewberry · Answer

How many units on your MFH? Also, will you be managing the property yourself? May want to factor that in as well. What's the ARV compared to the purchase price plus anticipated repairs? Down Payment? Perhaps the financing terms can be stretched out to allow for higher monthly cashflow per door. Just thoughts.