First 4plex (please harrass me/deal... I'm a newb learning)

[Luke S.]

I will begin with a little drawn out story about me before i get into the project.

Born and raised in Agriculture, will be focused on that industry throughout my life. I will however focus much of my capital and investable income into Multi Family Real Estate. I was lucky to learn some of the ropes from a very large Fargo ND property owner and am almost as cheap as he is in general :p.

The property I am looking at is in a neighboring town outside of Fargo with a Tech school and decent consistent renters. The couple I am looking to buy from are dwindling down the size of their operation (the wife manages it all and is sick of managing 170ish units by herself, she hates delegating work so she is cleaning and doing to much labor). They have one unit in the neighboring city (in MN state lines) and figured they would sell me this one if I wanted it. They are very open and good people to work with, IE will help me start building a team of repair men/cleaners, etc....

Here are the logistics of the property.
4plex
3 2bed 1 bath - $475
1 1bed 1 bath - $400
Coin Laundry - $75
Monthly Gross = $1900
(one unit currently empty, two tenants long term older people)

Expenses (that they gave me)

Insurance = $1891 (2013)
Prop Tax = $1684 (2013)
Snow/Lawn= $1220 (2012/13)
Garbage = $700 (2012)
Utilities = $1550 (2012)
Heat = $2000 (2012)
Total Expenses = $9045 ($753.75/monthly)

Cost $125,000.
Needs new siding (not going to repaint it), and paint windows.

Financing =
20% down 100k note @ 4% = 477 a month

Buy for 120, 30k down 90K note @ 4% = 429 a month (probably do this one)

total expenses = 1182.75 (mortgage and expenses)
Gross income at 25% vacancy = 1425
Net income at 25% vacancy = 243/month (2916 a year)

This is almost 10% cash on cash at 1 unit empty at all times.
On a 10% vacancy its over (528 a month/6,336) 20% cash on cash....

Please help me pick this apart some; like I said, its my first deal and I am just nervous, to conservative, etc.. :p

We haven't computed the new siding cost (would be using his siding guy who is relatively good/cheap). Also, new appliances in all units, carpet is 75% and units as a whole in great shape.

Thanks in advance for the thoughts/help.

Luke

[Bill Robinson]

Originally posted by Luke Swenson:

Bryce Y.

Roof - 2 years old.
I calculated vacancy into the bottom.

(any good spreadsheet templates you guys use?)

the sq ft is about the same as my crappily insulated house is, and i only probably dump 1200 into heat for a winter?

My plan in the long run as tenants get replaced is to meter out water and slowly pass those expenses into the tenants.

Thoughts?

Heat -- You probably don't crank the heat all the way up and then open every single window in the house in the dead of winter. Tenants do. What tenants don't pay for they use in amounts you can't fathom how they managed to use that much.