Potential first deal?

[Tyler Proffet]

Hey all! First time posting to the forums... hoping to get some feedback on a potential first deal...

A bit of background about us first (me and the wife), being's this is the 'new member' section and all ;)

We're both in our early 30's, entrepreneurs and looking for income that can allow us to live life to the fullest! (Aren't we all, here? :) ) We aren't afraid of work, but having our hours defined by someone else is starting to interfere with our existing (non-RE-related) business, our hobbies, friendships, etc.

Our current 'other' business is an online directory for Halloween haunted attractions, and we have vetted "Scream Teams" (review groups) across the country that help us create original content for the website. Keeping the site up-to-date is nearly a year-round commitment, but we manage to pull it off with our existing W-2 jobs. This was all fine and dandy while I was working a rotating group shift, or even straight midnight shift (helped with the long, late-night drives home from the haunted house), but last year, I was forced to start working a 12-hour swing shift. This severely limits the time I can spend doing website improvements and writing reviews during the Halloween months, so we decided to start digging and see what our other options were (which is how I found BP).

BTW, I work at a coal-fired power plant and she works M-F running the Amazon account for an off-road industry aftermarket parts manufacturer (another hobby of ours).

Since then (about 6 months ago), I've started binging on BP books, those written by Rich Dad and others by various business-related authors... I've got a dozen or so under my belt thus far, as well as a half-dozen select podcasts that I've gone back and caught up on the past year's worth of episodes.

I feel like I've got a pretty decent understanding of the fundamentals, and the concepts of using creative financing to analyze deals, but also humble enough to know that I'm far from an expert.

I should also mention that we've already got 1 rental property on the books. It's been active for 3 years now and we've been through 2 sets of tenants... Luckily with very little down-time (but a huge rehab / pool teardown / fire pit & deck remodel job) between them. It was our primary residence before it became a rental, and we literally moved next-door to our current residence, so keeping an eye on the place and learning the ins-and-outs of property management have been a breeze... just because of how close we are and how intimately familiar we were with the property before renting. It currently brings in about $150/mo in cash flow.

The next property we're looking at will hopefully put a huge dent in the journey towards FI. It's a 3,000 sq ft 4-plex in the historic district of our county seat. Asking price is $115K and (we're told that) it's currently tented in all 4 units at $560/month each. 

We have a $30K HELOC available via our primary residence, potentially for a $20K-ish down payment if necessary, but we're really hoping the bank will let us do 100% financing so we can avoid that extra $400-ish/month payment.

If we can get 100% financing, the $115K mortgage payment would be around $850 (6.375% for 20 yrs.).

If we need the $20K from the HELOC, we're looking at about $400/mo. for that, and around $680/mo. for the remaining $95K. (Our bank's HELOC's have a max term of 5 years.)

Other standard expenses: (via MLS listing)

Property Taxes: $185/mo.

Insurance: $135/mo.

Utilities (owner pays): $450/mo

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Total (no HELOC): $1,620

Total (w/ HELOC): $1,910

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Income: $560 x 4 = $2,240

($2,016, figuring 10% vacancy rate)

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Profit, no HELOC: $396 (incl. vac. rate)

Profit, no HELOC: $620 (not including. vac. rate)

Profit, w/ HELOC: $106 (incl. vac. rate)

Profit, w/ HELOC: $330 (not including. vac. rate)

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House has a partial new roof (split, part metal, part asphalt) and mostly newer windows. Haven't seen the inside yet... Waiting on due diligence for that... Or should we start knocking on doors beforehand?

Bank has told us that, since it's already tented, as long as the rent roll and profit/loss statements from the current owner look good, we're basically good to go on financing.

Thoughts? Anything obvious I'm missing at this point in the game? Any details I forgot to include? 

Thanks in advance everyone... Super excited to be on BP!!