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Updated about 5 years ago,
Estimating Rents, Income & Finding Financing
Looking for answers and recommendations from the BP Family. I'm 25 and looking to get into rentals.
Recently I have been looking into a 4-plex in my area and have been doing some research to gather all the numbers needed. I'd like some assistance to know if I'm looking at this correctly.
1. Taxes. Just over $2,700. I have the taxes for the property, since that is listed on the MLS listing.
2. Rent. $2,500. Have reached out to a local property management company to get what they think the units will rent for. Neither the property management company or myself have walked the property yet, so these are just our current best guess for running the numbers sake.
3. Utilities. Utilities are separately metered and will be paid by the tenants.
4. Variable Landlord-Paid Expenses. I'm setting aside 10% for each category for a conservative number: Vacancy, Repairs/Maint, CapEx, & Property Management (which I did confirm with the management company)
5. Net income desired. I'd like to get at least $100/month/unit. So a total of $400 for this 4-plex after all expenses, assuming that I'm not managing the property.
6. Closing costs and rehab. I put a place holder of $2,500 for closing and $5,000 for rehab, since I haven't walked the property yet (don't roast me on this, I understand that I need better numbers and will get them when I walk the property with a contractor).
7. FINANCING. This is the big one at the moment that I'd like recommendations for, if you all have any. Reached out to a local bank who wasn't willing to do a 30 yr fixed rate on the property, saying that it's commercial and should be done with one of their commercial loans, no thanks. I'll be reaching out to more local banks and have also been contacted by a BP member who is with an investor group. The financing is currently my largest question mark when it comes to running the numbers on these deals.
What I was told by the individual with the investor group said "30 yr is 6.25 on 4 units NOO without income or DTI calculations".
I have created my own excel spreadsheet and have also been using the BP rental calculator to go over the numbers. From these numbers, it looks like I can offer about $176,000 if I come up with a 20% down payment to keep on my mark of $400 net profit for the property.
What am I missing? Any advice as to what I am missing would be greatly appreciated. I'm basically using this property as practice for running numbers, but of course I want to follow through if it's a good deal. Thanks!
Recently I have been looking into a 4-plex in my area and have been doing some research to gather all the numbers needed. I'd like some assistance to know if I'm looking at this correctly.
1. Taxes. Just over $2,700. I have the taxes for the property, since that is listed on the MLS listing.
2. Rent. $2,500. Have reached out to a local property management company to get what they think the units will rent for. Neither the property management company or myself have walked the property yet, so these are just our current best guess for running the numbers sake.
3. Utilities. Utilities are separately metered and will be paid by the tenants.
4. Variable Landlord-Paid Expenses. I'm setting aside 10% for each category for a conservative number: Vacancy, Repairs/Maint, CapEx, & Property Management (which I did confirm with the management company)
5. Net income desired. I'd like to get at least $100/month/unit. So a total of $400 for this 4-plex after all expenses, assuming that I'm not managing the property.
6. Closing costs and rehab. I put a place holder of $2,500 for closing and $5,000 for rehab, since I haven't walked the property yet (don't roast me on this, I understand that I need better numbers and will get them when I walk the property with a contractor).
7. FINANCING. This is the big one at the moment that I'd like recommendations for, if you all have any. Reached out to a local bank who wasn't willing to do a 30 yr fixed rate on the property, saying that it's commercial and should be done with one of their commercial loans, no thanks. I'll be reaching out to more local banks and have also been contacted by a BP member who is with an investor group. The financing is currently my largest question mark when it comes to running the numbers on these deals.
What I was told by the individual with the investor group said "30 yr is 6.25 on 4 units NOO without income or DTI calculations".
I have created my own excel spreadsheet and have also been using the BP rental calculator to go over the numbers. From these numbers, it looks like I can offer about $176,000 if I come up with a 20% down payment to keep on my mark of $400 net profit for the property.
What am I missing? Any advice as to what I am missing would be greatly appreciated. I'm basically using this property as practice for running numbers, but of course I want to follow through if it's a good deal. Thanks!