First Time Buyer in St. Louis Market

[Jared Mann]

I am currently preparing to buy my first property ever in the St. Louis market.  I was originally planning on getting a condo with 20% down in the Central West End, but the more I look at the numbers, the more I am drawn to a getting one of the 4-plexs that are all over South City area.  In particular I am looking at a 220k property that currently has 3 long term tenants and rents for $650 a door.  I would owner-occupy and more than likely only do 5% down.  While I am getting closer to pulling the trigger, I am curious for any tips on getting started, whether they are general or preferably, specific to the St. Louis area.  Additionally, I'm curious what the community thinks in terms of leverage, if I am taking over 3 units with instant cash flow, and there are no immediate renovations needed, is there a concern that I would not have my typical 3 month of living expenses on hand?

[Max Householder]

Where is the property? What is the status of the systems (stacks, hvac, electric panels)? Roof? Sewer lateral? Are the rented apartments updated or will they need extensive turnover if a tenant moves out?

On how much to put down, what are your goals for the property? How long do you want to live there? Do you just want the tenants to pay it off for you or do you need the cash flow in the near or medium term?

If you're putting down 5% because it's all the money you have, i.e. you won't have any cash cushion (mentioned 3 months living expenses) that seems like a pretty bad idea IMO. These older 4-units tend to hoover up cash at first. When you take over management everyone will have 10 things to fix they were too lazy to tell the old owner and there are always more little expenses than you expect. If a job loss would put you upside down without any buffer, maybe saving up a 25% downpayment first and then decide if you want to do 5% and have the rest as a cushion. Just my $0.02