4 Plex Worth It?

[Lucas F.]

Hello,

I own 3 student rentals and have since decided to pursue another avenue in investing. I am considering putting in an offer on a 4-plex. I realize the numbers don't appear to be as rewarding as student rentals, but is it worth it?

Purchase Price: 380,000

Gross monthly income: 2,700

Utilities: Tenants Pay

Property Taxes: 400 a month

Insurance: 160 a month

Downpayment- 20% (76,000)

Closing Costs- 2,500

The apartment is in a good location close to my principle residence, but do the numbers work well, or are they too low?

[Steve Vaughan]

For nice plexes in  my area, I can pay up to about .9% per month in rents. I usually need at least 1% on a b- property, but will sacrifice for A properties with A tenants.

 For example I am looking at a duplex.  Sweet updates, great neighborhood, hot tub, storage, covered parking, professional-working tenants.  They want $200k. My max is $188k with rents at about $1700/mo. I offered $176,841 to get started.  Pretty much a break-even CF that the rest of my portfolio can absorb if needed. Am in talks with the seller.  

Your opportunity at asking price is only at about .71% of rents per month.  My model would necessitate a price of $300k on your asset. I would be at $301,463.  I never offer big round PFA numbers.  At least look like you applied an analysis to it!

Then again, I'm not in your area or even your country.  Do what works for you.  You certainly don't need my permission.  I would at least strive for 92% of asking less commissions if off-market.  Paying retail or full asking in general is not what we do.  Good luck @Lucas F.!