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Updated almost 8 years ago,

User Stats

8
Posts
8
Votes
Bradley W.
  • Real Estate Agent
  • Sacramento, CA
8
Votes |
8
Posts

First Potential Deal - California Triplex

Bradley W.
  • Real Estate Agent
  • Sacramento, CA
Posted

Hi everyone,

My name is Brad and this is my second post on BP Forums. 

I've been endlessly searching for duplex's and triplex's in Northern California for my first deal. So far I have found a couple possible listings with the help of my local Real Estate Investor friendly agent, Wes Blackwell, including this property below.

Just thought I would kindly ask for some additional eyes to look at this deal with me.

Triplex - SFH with a 2 Unit duplex on the adjacent property.

1 Bedroom - 1 Bath, roughly 900 SQ feet for each unit. Having 2 structures (with the SFH on its own property/yard) is an appealing aspect of this deal. The SFH will definitely have more upward potential for rent.

Purchase Price - $260-280k

I'm always jealous when I hear some of the low prices that are referenced on the BP podcasts & forums. The high prices are a hindrance here in California, however I feel that if I can make things work here (in CA), I will be able to succeed in other states in the future. 

Down Payment - 20% - $52,000 / $56,000

30 year conventional. Interest rate around 4.5%

Estimated Repairs - $12,500

Estimation, as this is my first deal I still have a bit to learn about this side of Real-Estate investing. Also, have not even SEEN the inside yet. This can go upwards or downwards from this figure (most likely up). I have the resources to either complete many of the repairs myself or with family connections. 

ARV - $340k

(Will have a more accurate figure soon)

Current Rent - $800 per unit x 3 = $2,400

Appears below market rent for the area. 

Based on my research thus far, the SFH should rent for ^$1150 easily with each side of the duplex going for around $1000. My goal is to achieve $3000+ per month for all of the units fully rented. This will require some repair and upgrading to achieve these prices but I am fully confident it will generate close to this. Additionally, there are strong forecasts for the Sacramento area in terms of rent prices increasing in the near future.

Property Manager - 8 / 9% of rent income - $250

I have decided very early on that I will not self-manage. I'm too nice for this job and cannot see myself demanding for a tenants payment if they request to pay a couple days over the due date. I feel as if I would always allow it (not good). Because of this, I have already found a great local source for Property Management.

Purchase Cap Rate: 9.85%

I ran all of these figures into the Rental Property Calculator here on BP, above is the estimated Purchase Cap Rate. I included 5% vacancy and 6.5% repairs/expenses. 

Please let me know of any initial thoughts that you may have solely based on the numbers. Obviously, there are a number of other factors that can affect the success or failure of an investment. After taking a look at this property yesterday, it has passed the (I would live there myself) test. The neighborhood appears much nicer compared to some of the past possibilities I have looked at.

I'm definitely excited and ready to start my Real-Estate investing career. Each time I listen to a BP podcast I find myself with even more motivation than before. 

Regards,

Brad Ward

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