New investor needs a cost review of a Spokane Triplex

[David Sweeney]

Hey everyone, just upgraded to PRO today!! Can someone give me a quick eyeball test on this?

Last month, I found a 5-unit, but everyone talked me out of going commercial on my first deal. So, I found this triplex on Craigslist: 1007 N. Cannon St. Spokane, WA 99201.  According to Zillow, the owner listed it twice last year, pulled it off MLS and now appears to be selling it on Craigslist. Here's the particulars. I don't have a lot of experience analyzing costs, so if anyone has any suggestions I'd sure appreciate it.

PRICE:  $127,500

RENTAL UNITS:

• 2 bedroom/1 bath on main floor. (I estimate $840/mo.)
• 1 bedroom/1 bath upper floor. (I estimate $672/mo.)
• 1 bedroom/1 bath basement. (I estimate $672/mo.)

DOWN PAYMENT: $25,500

LOAN AMOUNT: $102,000

MONTHLY P&I: $516

VACANCY 5%: $109

CAPEX 10%: $218 (Is this somewhat accurate?)

WATER/SEWER: $50

INSURANCE: $100

PROPERTY TAXES: $53/MO.

REPAIRS 5%: $109 (Not sure about this number either. I'm probably low, right?)

ELECTRICITY: $25 (All units are separately metered. Does this just mean electricity? Or do they pay their own water/sewer too?)

GARBAGE: $50 (I have to pay this, right?)

MONTHLY INCOME: $2184 - MONTHLY EXPENSES: $1,231 = MONTHLY CASH FLOW: $952

What do you think experienced investors? Should I get the exact rent roll and utility bills? Is my repairs estimate too low? Anything else I'm missing? Thanks so much!

[Andrew Johnson]

David Sweeney A couple of things:
1.) Always ask for a T12 to learn about occupancy, collected rents, etc. as well as real numbers for repairs. Also ask when the current tenants of the units moved in.
2.) Assume the "real numbers" or repairs will be low. Seldom will you be pleasantly surprised by repair numbers on an older property.
3.) Ask when the roof was last replaced as well as the HVAC systems. If the roof has issues the "real" purchase price isn't $127,000.
4.) The free market has spoken, more than once, and said this property isn't worth $127,000.
My advice: First step is a T12. Second step is touring the property with a contractor (pay him/her for their time). A home inspection will reveal issues but a contractor can likely spot major issues immediately that could materially impact an offer price.