Rental Property Investor · Anchorage, AK · Member since 2013 · 50 posts · 8 votes
We recently moved to a new state (where properties are quiet expensive compared to TX) and we found a quadplex for sale for $429k. Rents are a bit below market at $955 and we want to owner occupy utilizing the FHA process. I believe rates could be increased around 100/150 per unit and still be quiet competitive. 1 unit is fully remodeled and the owner would like to stay in it. The other three could use the normal fix up.
Here's the run down. (#s came from listing agent so they should be solid as of last year)
Mortgage - $2365
Taxes - $512
Ins. - $200
Trash/all utilities - 475. (Tenant pays their own electric)
Reserves (4%) - 152
Vacancy (2%) $76. (Very low vacancy in city)
At current rental rates
If I'm not mistaken Cash in Cash = 10.87%
Cap Rate = 7%
For an area that's challenging to find, is this worth continuing with? Area is good, and there are def ways to add value to property. Not a HUGE cash flow machine soooooo what are everyone's thoughts???
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
@Drew Dim, here is my rough guide. Say $3000/m gross rent for the 3 other units, resulting in net $1500/m after expenses (NOT including your mortgage!)
You might be lucky not to have to put 50% of the income into expenses, but it is still likely to be less than $2000/m net return, which won't cover your mortgage.
Yes, you might still get to live cheaper than renting, but would that be the best use of your three figure savings that you are looking use as your deposit?...