First time investor, is it a good deal?

Question

I am buying a 5-plex in Roseville. Purchase price of 775K and monthly rents @ $6300. Landlord pay for Wanter and Sewer, rest of the expense are on tenants. Property is built in 1950's with five independent homes with each with its own side yards. Will appreciate your feedback.

Thomas S. · Answer

It's possibly a OK deal but not a good deal.

After mortgage and expenses you will be very thin, possibly negative, and considering you have $232K in dead equity you need to get the price considerably lower to make any positive cash flow.

Not a deal I would waste much time on.

Gary B. · Answer

thanks Thomas and Carlos. what would be example of deferred maintenance ?

Carlos Zapata · Answer

I Totally agreed with @Thomas S.   are you still on your due diligence period?  if yes you may renegotiate the price or some terms, of some deferred maintenance

Gary B. · Answer

property is close to elementary school and have mostly single family homes around.

Gary B. · Answer

Property is in a old Roseville, decent school district. It is a 60 years old property so it does need some fixing. Expense of about $3k.

currently units are rented at $1200 (not upgraded) x 3 + $1400 (upgraded) x 1 + $1300 (upgraded) x 1

I put in 30% $232,500 and mortgage payment of around $2800.

property taxes are 1.02% ($7905 annually) and insurance I have not figured out yet

Alex Shaughnessy · Answer

You need to give a bit more info. what class property/neighborhood? is it rent ready? cost to get rent ready? can it be metered separately? etc a lot more obviously but I think to get decent advice there needs to be more info

David K. · Answer

@Gary Bahl,

to be able to provide any advise at all, you need to give a lot more info - what are the taxes, insurance, what is the condition of capex and other expenses, is there any room to increase rent or is the current rent at the market prices, what type of neighborhood this is...So many tangibles that either make the deal good or not so good.

First time investor, is it a good deal?

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