Numbers Help for Newb

[Erik Gjording]

Hey all, I'm about to close on my first place which will be an owner occupied 4 plex. I have used all the calculators and rules but I'm still feeling like I am missing something. Would anyone be willing to help me check my math? I will attach the financials sheet from the property and would love if anyone could help calm my fears that I just screwed up with my first property. Thank you very much. 

PURCHASE PRICE: $480,000 w/ 3% towards closing costs

Property in 21043 area code

APT#1 - 3bd/2ba

APT#2 2bd/1.5ba

APT 3 & 4 1bd/1ba

Garages: 5 total that are approx 8x10. 

LOAN: 30yr VA Loan @ 3.75%, No downpayment

CAP RATE: I am calculating a cap rate of 8.8%. I took the average of his yearly expected rent and his 2016 totals to factor in some vacancy so $42265/480000. There is also a coin op laundry but he does not have any information on how much that brought in.

1% RULE: 3970/480000  = .82% but I think that adding in laundry and increasing the rent slightly will make up this difference quickly

50% RULE: 3970 / 2 = 1985 and my mortgage payments will be approx 2100. I think I am extremely close here too.

CUTTING COSTS: I will manage the property and I will do the minor maintenance and all lawn and snow to cut costs. I am also looking at ductless HVAC or on demand water heaters or point of use heaters which would shift some of the heating (radiant) costs onto the tenant instead of the landlord. 

INCREASING PROFIT: I will bump rent to match so unit 1&2 and unit 3&4 are the same since they are the exact same floor plans. I also think that I can bump the storage garages to 80-95 per month safely. I still have the coin operated laundry to add in.  

I think that my numbers are extremely tight and I may run into issues down the road when I look to have a management company. My goal was to live rent free or dramatically decrease my current rent which I think I will accomplish. 

Any advice or help would be greatly appreciated. Thanks all.