4-unit Purchase - Deal or No Deal @$420K

[Gilbert Gutierrez]

Hi Everyone,

I wanted to get some feedback on a property in consideration. I coming in roughly at a 5.7% CAP. Although, not sure if I'm being conservative enough. I am allocating roughly $100/month per unit to go towards repairs and capital expenditures. This is a lower income area that sits off a freeway. I'm using a vacancy factor or 10% although rent demand is high. What other major expenses should I be factoring in? Property is in decent condition, roof, windows, look good. No major repairs look to be needed at this time. Is $100/month/per unit enough to cover costs associated with turnover of a unit?

Either way, just want to confirm thoughts on this deal. Any advice is much appreciated.

Purchase price: $420K

4-Units - All 3 bedroom 2 bathroom

Annual Operating Income (rent): $42,840

Current Annual Operating Expense (Water/Trash, tenants pay utilities): $2,400

Down: 20%

Points: 1.35 (to keep the rate @5%) 

Rate: 5%

Total Aquisition costs (includes closing, appraisal, inspections): $99,350

Mortgage (P&I): $1804

Property Taxes: $5,212

Insurance: $2,058