What Am I Missing?: First Time Investor

[Richard Humphreys]

What am I missing?

I am a first-time investor. I have located a triplex in a college town of 69,000 people. The state university has 21,000 students. The triplex is located 1 1/2 miles from the State University closest. The triplex is priced at $30,000. The MLS listing says it when unit is rented but I suspected all of them are vacant. This is a possible investment in a town with which I am familiar but in which I do not live. I would need a reliable management company. I have built in the cost of a management company at 10% of the monthly expenses. The property has been on market for 370 days. My initial projections based on a buy and hold analysis are:

$1550 a month in income(Lots of assumptions here)

$904.78 monthly expenses(Including maintenance, management, and the vacancy rate)

$645.22 monthly cash flow

23.45% pro forma Rate

$9240 net operating income

x 50% for expenses equals $775

Monthly interest/payment equals $124.78

Total monthly cash flow using 50% rule equal $650

82.90% cash on cash return on investment

30.90% purchase cap rate

Total operating expense $780 dollars a month

As I stated earlier, the house is close to downtown and the State University. The town is attempting a downtown revitalization effort. Part of that effort it involves attracting residents to the downtown area. The cost of living is quite a bit lower than the US average. In the ZIP Code of where the property is located the average rent for two bedroom is $650 dollars per month. The average two bedroom rent for the town is $790 a month. The average rental for two bedroom and the state is $764 dollars a month(all based on 2016 Numbers)

The things that I don't know(that can kill me)

1.Occupancy history (Vacancy rate and why?)

2.Repair history and cost of repairs going forward.

What else am I missing? I need criticism, criticism, criticism….and some suggestionsJ

Thanks so much

Richard