Let's call it a case study!

[Dustin Dummer]

I'm looking to 'dive into the waters'. Don't know even know if it's possible yet but let's call this a case study just for fun. Here's some numbers: multifamily unit (4 units @$435) = $1740. They are smaller 2 bedroom, 1 bath units. Lets call them B to C ratings (don't look like they need a lot of work but a lower income downtown location. I haven't seen them yet but pictures looked better than I expected and don't indicate a lot of needed repairs.  IF I could get the units $135,000, $1200 yearly taxes. Would it be worth considering or does a property have to be purchased for much lower price? I'm sure a lot depends on financing options as well. Which at this point I haven't worked out either. I could possible get a second loan on some property that I own to cover the down payment. Any advice on other figures that I need, financing options, would a much lower price be necessary to even consider, etc? All advice is appreciated.

[Jeff Sprunger]

quick numbers:

$135,000 asking

$27,000 down payment (20%)

$108,000 mortgage at 5% (guess) = $580

Taxes $1200/year = $100/month

Insurance $1200/year(guess) = $100/month (guess, shop around)

PITI = $780/month (meets 50% rule)

plus

10% vacancy = $175 ($1740 rent x 10%)

10% management = $175

10% capex = $175

Sewer/Water bill (I find it hard to believe that tenant pays this) = $150/month (guess)

trash/snow removal = $50/month (guess)

10% miscellaneous (advertising, cleaning, buffer, etc) = $175/month

totals = $1680

cash flows = $1740-$1680 = $60

Essentially, you will break even if you turn it over to a property manager and are never involved in the day-to-day operations.  hopefully! maybe! very doubtful!!!

if you could get it for under $120K, it's a much better deal!  you could get a better interest rate still.  shop around for cheaper insurance.  maybe the tenants DO pay the water bill...in that case, you might be ok!

good luck.