2 bedroom 1 bath 4plex in tower district of Fresno CA

[Brandon Markos]

Hello community! I am looking at a deal and wanted help analyzing it. The price has been lowered twice by about 10,000 each time to 249,900 now. It is a 4 unit comprised of 2 bedroom 1 bathroom. It looks to me that the rents are about 700 each. I am thinking of using an FHA loan and living in one unit while renting the other 3. I would have to put 3.5% down totaling $8,750. Closing costs I am estimating at $10,000. My monthly Mortgage payment would be just under $1,300. After a year I will move out and be able to collect rents for all 4 units. I believe there may be room to increase rents although I am staying conservative at 700. If I use the %50 rule year one I should cashflow $100 a month. After year one I move out and collect $800 a month. These are not the great returns I have been hoping for, but in CA it looks pretty good to me. Please give me any thoughts and feedback you have. Rip this deal apart if it is no good. I appreciate your time.

[Jay Orlauski]

Closing costs seem a little high ... but otherwise here is what I come up with 

This includes vacancy and expenses but not management because you are living there ...

Monthly Operating Income	Scenario A
Number of Units	3
Average Monthly Rent per Unit	700.00
Total Rental Income	2,100.00
% Vacancy and Credit Losses	5.00%
Total Vacancy Loss	105.00
Other Monthly Income (laundry, vending, parking, etc.)
Gross Monthly Operating Income	1,995.00
Monthly Operating Expenses
Property Management Fees	199.50
Repairs and Maintenance	166.00
Real Estate Taxes	259.38
Rental Property Insurance	225.00
Homeowners/Property Association Fees
Replacement Reserve
Utilities	180.00
Pest Control
Accounting and Legal	(213.75)
Monthly Operating Expenses	816.13
Net Operating Income (NOI)
Total Annual Operating Income ( Gross Monthly x12)	23,940.00
Total Annual Operating Expense (Monthly Operating Exp x12)	9,793.50
Annual Net Operating Income	14,146.50
Capitalization Rate and Valuation
Desired Capitalization Rate	7.00%
Property Valuation (Offer Price)	202,092.86
Actual Purchase Price	249,000.00
Actual Capitalization Rate	5.68%
Loan Information
% Down Payment	3.50%
Down Payment	8,715.00
Loan Amount	240,285.00
Acquisition Costs and Loan Fees	2,490.00
Length of Mortgage (years)	30
Annual Interest Rate	4.500%
Initial Investment	11,205.00
Monthly Mortgage Payment (PI)	1,217.49
Total Annual Debt Service	14,609.87
Cash Flow and ROI
Total Monthly Cash Flow (before taxes)	(38.61)
Total Annual Cash Flow (before taxes)	(463.37)
Cash on Cash Return (ROI)	-4.14%

and after you move out , have raised rents and using management - 

Monthly Operating Income	Scenario A
Number of Units	4
Average Monthly Rent per Unit	750.00
Total Rental Income	3,000.00
% Vacancy and Credit Losses	5.00%
Total Vacancy Loss	150.00
Other Monthly Income (laundry, vending, parking, etc.)
Gross Monthly Operating Income	2,850.00
Monthly Operating Expenses
Property Management Fees	285.00
Repairs and Maintenance	166.00
Real Estate Taxes	259.38
Rental Property Insurance	300.00
Homeowners/Property Association Fees
Replacement Reserve
Utilities	240.00
Pest Control
Accounting and Legal	(213.75)
Monthly Operating Expenses	1,036.63
Net Operating Income (NOI)
Total Annual Operating Income ( Gross Monthly x12)	34,200.00
Total Annual Operating Expense (Monthly Operating Exp x12)	12,439.50
Annual Net Operating Income	21,760.50
Capitalization Rate and Valuation
Desired Capitalization Rate	7.00%
Property Valuation (Offer Price)	310,864.29
Actual Purchase Price	249,000.00
Actual Capitalization Rate	8.74%
Loan Information
% Down Payment	3.50%
Down Payment	8,715.00
Loan Amount	240,285.00
Acquisition Costs and Loan Fees	2,490.00
Length of Mortgage (years)	30
Annual Interest Rate	4.500%
Initial Investment	11,205.00
Monthly Mortgage Payment (PI)	1,217.49
Total Annual Debt Service	14,609.87
Cash Flow and ROI
Total Monthly Cash Flow (before taxes)	595.89
Total Annual Cash Flow (before taxes)	7,150.63
Cash on Cash Return (ROI)	63.82%