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Updated about 6 years ago on . Most recent reply
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Offer in on my 1st rental property.
Hello BP,
I been searching for the right 4 plex to start my journey. I feel I took too long to pull the trigger on submitting an offer on a deal. I watched great deals go under contract while I sat on the sideline. Watching others buy deals I had my eyes on shows I was looking in the right places.
All properties have 70% ARV as well the 1% rule AR. I am in a nice market (Massachusetts)
Question: Are all deals good if they past the 70% rule?
Thank you
Most Popular Reply
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@Ernest Partin Sounds like you might be mixing apples and oranges.
The 70% rule is for properties needing rehab. It says that your purchase price should be (ARV X 0.7) - Rehab costs. That's a pretty conservative number and doesn't always work around here where purchase prices are much higher than other parts of the country.
The 1% rule is for rentals and is a way of ballparking a deal. It just says that gross monthly rents should be at least 1% of the purchase price. Again, properties around here often don't meet this rule.
Both "rules" are more guidelines than actual rules.
I know that 4-plexes are attractive because you can house hack there and still have three rents coming in. The fly in the ointment is that they are somewhat rare. For example, right now in Plymouth County, there are a total of 85 MFRs on the market. Only 4 of them are 4-plexes.
They're expensive too. The lowest price is a mixed-use in Onset. 4 residential plus 2 commercial and it's $599K / $60K gross income. The other two are $655K /$62.7K gross income and $849.9K/$48.6K gross income.
You might be better off looking for a 3-plex. They're a lot more numerous and you might find more attractive numbers too - especially if you stay south of Boston.