COME ANALYZE MY TRIPLEX (first deal)

[Ryan Rice]

I just went under contract for my first deal and would love some guidance from you guys who know much more than me on this subject. I am going to provide much detail as possible. I apologize if this post looks sloppy, this is my first one, i appreciate all the help.

I am under contract for this deal right now. Conventional loan at 4.5% requiring that i put 25% and that I live in one of the 3 units. The property is 1032 square feet and each unit is about 340 square feet. It is comprised of 3 identical studio apartments with a bathroom and small kitchen in each. Deal is a 60 day close with 20 days contingency where i can basically get out of the deal for any reason.

Purchase price: $133,000 

25% down: $33,250 

Cash In the deal: $40,520 (Closing cost from bank $39,360+ $2,000 renovation budget+ I am paying sellers doc stamps est. $1,000 +$660 appraisal -$2,500 Agent fee) I am a licensed FL realtor (only 3 months)

Income: 3 units 

Unit A - $500/m - Smells like cigarette smoke and the tenant has a dog, has carpet that I think will have to go

Unit B - $500/m - Very strong urine smell

Unit C- $500/m - no weird smells

- All 3 units had some drywall issues, needed paint and have outdated electrical panels.

-The property is about a half acre and most of it is cleared. Potential to build storage units or another triplex if the numbers made sense.

Total property income: $1,500/m $18,000/y

Expenses

30 year fixed rate mortgage (4.5%): $713/m $8,556/y (Includes Home insurance and Taxes)

Water (well): $47.833/m $574/y - Numbers are directly from seller

Lawn: $48.75/m $585/y - Numbers are directly from seller

Electric: $31/m $372/y- Numbers are directly from seller

Cap ex 10%: $150/m $1800/y

Vacancy 5%(self managing): $75/m $900/y

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Total Income: $1500/m $18,000/y

Total Expenses: $1,065/m $12,787/y

NOI: $434.42/m $5,213/y

COCROI: 12.87%    

I called the best property manager in the city and had him tour the property with me inside and out, he said studios in decent condition in this market are going for about $600/m so that is my upside if i can fix what i need to with the $2,000 allotted for it. If I can get the rents to $600/m my COCROI would be 20.42%. The property has no washer/dryer so all the tenants are having to go to a laundry mat. I went to the laundry mat and found they're charging about $3/Load. I worked the numbers on adding a shared pay-to-use washer/dryer at the property and it didn't seem to add up. Maybe it does and I'm doing the numbers wrong?

The owner also mentioned owner financing at 7.5% with 12k down. I could probably talk her down some but it seems like the bank is giving me a good deal. Is this how YOU would analyze this deal? What am I doing wrong? What am I missing? Please let me know below. I am a rookie and need YOUR help!

This is a deal I am asking for advise on only not advertising for any other reason. Thanks!