4plex guidance please!

[Bob Crummer]

Thanks in advance to everyone at BP, this site has taught me a lot so far and I am in need of some guidance!

I am looking at a four unit, bank owned, vacant for 6 months property in a small town. Ask price is $80k.

Vacancy rate in this area is extremely low.

I expect the purchase price will be at $50k with me putting a 20% dp. Mortgage on this is projected at 6% amortized over 30years.

The plan would be to renovate all 4 units using private money, 10% interest only @ $100,000 for a minimum two years...guaranteed interest to lender as part of agreement.

Refi is expected after two years at a value of $175k, 70% of value paid out...so $122,500.

I would pay out the original mortgage, and payoff the repair loan with the remaining cash to lower yearly payment.

I was advised that fully renovated, I should expect $2950/mo. If I wanted to wait a few months I could get more.

Expenses- taxes 1300, insurance 2400, water 1400. Capex 5%, vacancy 10%, lawn/snow $1500.

The bp calculator says it’s good, but should I be concerned about any issues with putting 100k of repairs into a building that sells for 50k?

Please note that I can carry all expenses if it sits vacant full time, so I’m not concerned that way, but would prefer for it to cashflow as quickly as possible.

What do you think?