All Forum Posts by: Account Closed

Greetings BP,

I have been trying to break out into the world of multifamily REI. However, there is not a single property in my area or the surrounding areas that will cash flow even close to $100/door. I am under contract for a duplex currently but the only way I could get it to cash flow at $100/door was to do a cash purchase.

This property was the closest by far to getting $100/door then the other 60 or more properties I have analysed. Below is the break down on the numbers.

Purchase price: $46k

Scheduled Rents: $1300/month ($650 each unit)

Expenses are

Garbage: $60/mo (approx)

Lawn/Snow Removal: $60/mo (approx)

Water/Sewer: $60/mo (approx)

Insurance: $58/mo

Property Taxes: $283.33/mo (ouch, I think this is the reason for not making cash flow)

Vacancy: $130/mo (10%)

Capex: $130/mo (10%)

Management: $130/mo (10%)

Repairs: $65/mo (10%)

Cash Flow w/ Mortgage (25% down, 20yrs at 6%) = $76.50/mo ($38.25/Door)

Cash Flow w/o Mortgage = $323.67 ($161.84/Door)

What am I doing wrong? Or is it all due to the property taxes?

Any and all insight is very much appreciated

Thank you,

Jason

Thank you all for your input. It is much appreciated. The rents are at the high end for the area so I think the only way to increase the monthly cash flow is going to be by buying the property at a much reduced rate. 

Thanks again.

I meant just under $500/mo

If I include the management expense then it is just a hair over $500/month. If I don't include management expenses, then it is a whopping $141/month for 6 units. :(

Greetings, 

Have a potential to purchase a 6 unit (2 house, same lot, 4 unit and 2 unit) The details are as follows.

Year built: 1900 +/-

2 houses: 1- 4unit and 1- 2unit on same lot

List Price 224,995 (assuming a 190,000 purchase price and 25% down payment)

Expenses

Mortgage 1104.80/month (20yr term @ 7%)

Taxes 443.93/month (5327.15/yr)

Insurance 224.58/month 

Water/Sewer 41.25/month

Electric 10.85/month

Garbage 85.08/month

Snow 68.75/month

Lawn 54.58/month

Heat 0.00/month (each unit has its own furnace)

Income

Unit 1 - 550/mo

Unit 2 - 595/mo

Unit 3 - 650/mo

Unit 4 - 750/mo

Unit 5 - 595/mo

Unit 6 - 225/mo

3365/mo 

Vacancy 10% = 336.50/mo

Repairs 5% = 168.25/mo

Capex 10% = 336.50/mo

Property Management 10% = 336.50/mo

All units in good shape and no deferred maintenance to correct. I plan to manage myself but still added in management expenses. 

Is this worth the money? All feed back is appreciated.

Thanks

Jared, 

Thanks for the response. I am calling my realtor tomorrow to schedule a walk through and look at the books. Hopefully all will check out ok. 

Colleen, 

Thanks for your reply. This would be provided by me to keep the heating costs down. It would be the main source of heat with fuel oil back up. It would be tied into the thermostats in the units themselves. I would feel better knowing that all I needed would be to buy 6 tons of coal per year (for unlimited heat) as to hoping tenants would not run up the fuel bill. I am sure that most insurance companies would balk at this type of heating system tho. Thanks again.

Stephen, 

I was wondering if it would be allowed. Will check with insurance companies. Tx for the response.

Shawn, 

Unfortunately nat gas is not an option yet in this area. Tending/feeding would need to be every 2nd or 3rd day. But as  Stephen Bell mentioned, I would need to contact insurance company 1st to see if it is allowed. tenants would definitely not have access to it.  Tx for your input.

Chase, 

Thanks for the suggestion. I will inquire with the utility company and go from there. 

Kevin, 

Thanks for replying. I wasn't thinking of putting electric heat in as an auxiliary. I was thinking a coal furnace.  Section 8 compliant housing. I'm just trying to preserve any of my money that I can against the Heat happy landlord.

Thanks

Jason