Help me please to analyze a deal

[Mary Jay]

I made an offer on a fourplex...230K, rents per zillow 750$/unit per month but seller says his income is 3.5K per month...

They say that, if I am undertanding it correctly, expenses are 40%...( which makes it about 1.2K per month)..So mortgage probably 1500$/month...I guess my cashflow is about 800$/ month if fully occupied...

I am putting 60K down...Isnt 800$ per month cashflow is too little for 60K down?

It is more than than 1% rule (according to the sellers numbers) but I just have a hard time accepting that 60K will give me only 800$ per month in cash flow...

ANd its if seller does not lie...

Are my numbers wrong?

Thank you!

[Peter M.]

Well if the seller says rents are 3500/month and expenses are 40% thats $1400 and if you say your mortgage would be $1500 that leaves you with $600/month. 600/month is $7200/year which makes your ROI 12%. If you make 800/month that is 16%. Both are good numbers if you compare it to stock market returns. You still make the 1% rule wether the rent is 750 or 875 but the 1% rule is just a guideline, you can't actually base real numbers off of it.

If your offer is accepted make sure you get all the leases, proof of expenses over the past year and an estoppel statement signed by the tenant and owner for each unit. Also, don't put all your faith in Zillow's estimates. Get your agent to run actual sold and rental comps in the area.