I think I found a deal! Now what?

[Andrew Bondarchuk]

Okay BP friends - I need your help...

I think I stumbled upon a great opportunity but I would like to hear everyone's opinion and perhaps whether there is anything I am missing.

This is a 4 unit building consisting of studio apartments at 336 sf per apartment (basically shoeboxes). It is walking distance to a university which makes me nervous since I remember what I did to my college apartment (not at all proud of it but this was 10 years ago).

All 4 units are occupied so I don't think I need to do repairs and I won't need to look for tenants. They are renting at $450-$475 each for a total of $1,875 per month, although I think I could raise the rent and the contracts are almost up.

HOA fees are $1,152 per month which sounds extraordinarily high to me but it says that outside repairs (such as the roof) are covered. Real Estate taxes are $50 per month (is this the same as property tax)? Total expenses listed are at $14,424 annually with $22,500 in income for a net of $8,076, $673 monthly.

The property is listed at $89,000. I could probably raise the money for a $10,000 down payment as a loan from my 401(k) which would eat up $200 per month from cash flow since I have to pay it back. Also, I would need to finance the remaining $79,000 and there goes my remaining cash flow. 

Still, if I were to break even to eventually own the property flat out or raise the rent such that I am producing monthly cash flow, does it sound like a good deal?

Or perhaps there are other options I am not considering that would not kill my cash flow.

I appreciate any advice, guidance, suggestions or warnings anyone can offer. I'm excited but I don't want to do anything stupid.

Thanks everyone!

[Byron Bohlsen]

That HOA fee is outrageous. The HOA fee on my condo is 247, and guess what? Outside is covered. What about insurance? HOA don't normally cover inside the unit and you should at least have liability.

Maybe if you can somehow get rid of the HOA or got it for 20k lol.