Advice on possible multi-unit purchase

[Greg Atwood]

New investor here, looking at a multi-unit property located in a college town of about 200,000, approximately a 2 hour drive from where I live.   The deal consists of 4 duplexes built in last 3 years with all new features, all electric HVAC/Heat, on acreage with septic system/well. It's located in one of the most desirable and fastest growing school districts in the area.

Each of the 4 duplexes (8 units) have a 2 bedroom/1 Bath/1 carport with nice wood vinyl floors, upgraded kitchen and bathroom. They are fully occupied and easy to rent whenever vacant. They are getting $925 per moth per side $1850 per duplex building.  In speaking with the management company I would use if I do this deal, that is the upper percentile for rent for these type of properties in the area, so there is not much room for rent increases.

Included in this package next to the 4 duplex properties is an existing manufactured home that has long time tenant paying $600 per month. This must be included in sale but has great cash flow on it.

Very little maintenance/repair on this package because of age and all electric HVAC/Heat. Total lot size is 1.5 AC.  Cap rate is listed at 9.16%.  Asking price is $750,000.  The tenants pay their own utilities, but owner covers the electricity for the well and dumpster $85/month total as well as $50/month in lawn care service.  Each duplex unit is 925 sf and the mobile home is 1500 sf.

The NOI is listed at $68,692, but I would hire a management company locally that would take about 10K off of that. I would just like it to cover itself on a 15 year mortgage, then use the rent to help cover my retirement in 15 years. The next step is a letter of intent after which I should have access to the P/L statements to verify everything.

Any red flags right up front?

Any other advice for a new investor?