Yay or Nay (purchasing a 4unit rental)

[Red Peterson]

4 - 1BR property up for sale. Very old bldng and dated. Seen this property on and off market since 2015. Tenants are long term been there 4yrs and up (and get along), and one is less than a yr. If I do 15yr mortgage, its around $1600. Tax $650. Total rent $2100. My worst fear is the age of the bldng and possible big repair. It’ll be my very first RE investment so I am unfortunately in the stupid, new, naive, and excited category. Any tips from experts and experienced investors out there? Im planning to offer with contingency to home inspection, if we move forward. Should i bite this one? 

[Alecia Loveless]

@Red Peterson My first property was a 4 unit, older property. Just make sure you factor into your figures your CAPEX, Vacancy, and Management if there will be any. For an older building should probably be about 7% for CapEx, 5% for Vacancy in the current market, and if you're hiring management about 9%.

I’d also recommend a 30 year mortgage because the tenants are paying it off with their rent and you’ll make a better return reinvesting the cash flow that’s left over in another property or in a mutual fund at 8% or something else than paying it down quickly on a 15 year mortgage where your interest rate is only 2.99%. It’s cheap money and unless you refinance it out later your fixed mortgage rate will never change.