New Investor - 4-plex opportunity analysis help

[Cliff Sands]

Hi bigger pockets fam…I'm REALLY new to this as in I joined the forum about a week ago. I have an opportunity I would like to get some perspective on if you wouldn't mind. I located a new construction 4-plex in an area I am familiar with, list price is $575k. I exploring the use of my VA loan to finance the entire amount, no money out of pocket. The mortgage with P&I, and Tax would be roughly $4000/mth. Each unit rents for, conservatively, $1200/mth. I would owner occupy one of the units and rent the other three. Leaving me to pay $400/mth for my living situation. I would manage the 3 other units myself, cap ex and repairs should be minimal since it's new construction.

My goal here would be to rent the 3 other units for ~60 months, live in my unit for 24 months and then rent that unit for the remaining ~36 months. I would then look to sell the property at the 60 month point.

My numbers on mortgage buy down and appreciation suggest about $150k equity at the end of 5 years. I would look to sell and then utilize that capital to do more deals with. The equity figure does not include any cash flow I would get the final 36 months from renting the 4th unit.

Are there any glaring omission in my analysis? Any and all thoughts appreciated!

[Guifre Mora]

Originally posted by @Cliff Sands:

Hi bigger pockets fam…I'm REALLY new to this as in I joined the forum about a week ago. I have an opportunity I would like to get some perspective on if you wouldn't mind. I located a new construction 4-plex in an area I am familiar with, list price is $575k. I exploring the use of my VA loan to finance the entire amount, no money out of pocket. The mortgage with P&I, and Tax would be roughly $4000/mth. Each unit rents for, conservatively, $1200/mth. I would owner occupy one of the units and rent the other three. Leaving me to pay $400/mth for my living situation. I would manage the 3 other units myself, cap ex and repairs should be minimal since it's new construction.

My goal here would be to rent the 3 other units for ~60 months, live in my unit for 24 months and then rent that unit for the remaining ~36 months. I would then look to sell the property at the 60 month point.

My numbers on mortgage buy down and appreciation suggest about $150k equity at the end of 5 years. I would look to sell and then utilize that capital to do more deals with. The equity figure does not include any cash flow I would get the final 36 months from renting the 4th unit.

Are there any glaring omission in my analysis? Any and all thoughts appreciated!

Cliff,  This is not how you analyze an investment opportunity, you need the following:

1) Purchase: $575,000

2) Total Annual Operating Income: $43,000 (1,200x3x12) 

3) Total Annual Operating Expense: 

   a) % Vacancy:

   b) RE Taxes Property: 

   c) Hazard/Insurance:

   d) Repairs & Maintenance:

e) CapEx:

   f) Utilities-other:

g) HOA:

4) Actual Capitalization Rate:

5) Loan Information

   a) Down Payment: $0

   b) Loan Amount: $575,000

   c) Acquisition Costs and Loan Fees Rehab Funds:

   d) Length of Mortgage (years):

   e) Annual Interest Rate: 

6) KPI's:

a) DSCR:

   b) 1% rule:

   c) 50% rule:

   d) Cashflow (before taxes):

e) ROI:

Plug it in I'll do analysis for you. If you have any questions on the specifics let me know I'm glad to hello you.