Four-plex help in Michigan

[Brandon Gentile]

Hello BP Community!

I have a multi-family (4-unit) property that my parents and I are looking to acquire in Michigan (Northern metro Detroit). It is an interesting piece and I would LOVE to get some feedback from what the community thought!

Listing Price: $199,000

1.59 acre lot with TWO Side-by-Side Duplexes

Rent $2000/mo gross ($500/unit)

Sq. Ft. 2,660

Winter Tax: $481

Summer Tax: $2,396

Solid condition. Backs up to small lake. Excellent area and excellent schools. Renters are long term and looking to stay. And, I believe I know why; they are staying there on a bargain! With $500/mo rent per unit I estimate the property would be worth somewhere around $120,000-150,000. This was done taking the automatic 50% away for expenses.

I feel as if they just comp'ed the house as it were a SFR. Which I am sure happens a fair amount with seller's and agents who do not understand the investing side of real estate.

Any help with running the numbers or advice in general would be appreciated very much!! Thank you!

[Mark Yuschak]

I also just found it on the MLS and share the same sentiments as Tom.

The "furnace" in the one picture certainly raises reason for concern. I would equate that furnace to a wall heater, which contains no ducts for efficient distribution of the heat. In addition, those systems don't lend to having central air conditioning. Not only are they inefficient, they're limiting, and surprisingly tenants recognize how poorly they heat. It could be a hurdle to finding new tenants.

I would also want to know about the septic system. If it's one designated system per building, per unit, or per parcel! If all four units are going into the same system, that could be quite taxing. A replacement, when the time is necessary, would likely mean bringing to current code which could mean a separate system for each unit.

I'm 99% sure that road is gravel. Being in a country setting could be challenging for finding new tenants. Especially for a multi family.

Each unit only has one bedroom. My experiences are that one bedroom properties take the longest to rent and keep occupied. One bedroom property tenants tend to be most transient. The school district is a plus, but tenants in a one bedroom property likely won't have children attending the schools.

These are just my thoughts. Feel free to give me a call if you'd like to further discuss.