Signed up my first deal!

[Nick Horob]

I completed a direct mailing to small MF owners in Fargo, ND.  I sent 400 letters, received 25 calls, and found 5 "hot" leads.

I signed a purchase agreement on Friday to buy two 4-plexes for $330k.  Not quite the 10% cap rate I was targeting but close.

They are all 2 bd, 1 bath units fully rented for $500/mo.  Landlord pays heat which averages $100/building/month.  $200ish from Nov-March.  

Borrowing $235k @ 4.5% and 20-year amort. $100k downpayment.

The rents are approximately $50 below market so I'll be looking to adjust those as leases expire.  If I can get the units to $550, the cash-on-cash will be 15%

Here are the initial numbers.  Just wanted to share!

Gross Rent	$ 48,000.00
Less: Vacancy	$ 2,400.00	5%
Less: Taxes	$ 4,800.00
Less: Ins	$ 2,600.00
Less: Utilities	$ 2,400.00
Less: Mgmt	$ 3,192.00	7%
NOI	$ 32,608.00
Cap Rate	9.881%
Less: P&I	$ 15,600.00
Less: Capex	$ 6,000.00
Net Cash Flow	$ 11,008.00
	11.0%

I have a $60k offer in on a tri-plex that needs approx $10-15k of work.  Even if we can settle on $70k, that deal should be 12% cap rate and 16-17% cash-on-cash.

Not home run numbers but they fit my plan.  Best of luck to the rest of you!

[Nick Horob]

Table didn't past well in first post.