4Plex in Milwaukee

[Peter Kush]

Hi BiggerPockets. I came across this forum recently, and now am going through the podcasts and trying to keep up to date on all the forum posts.

A little about me: worked as a financial analyst in a small (3000 units) Real estate rental business which incorporated a property management company. Currently working a 9to5 (more like 9tomidnight sometimes) tax position in Chicago.  I'm looking to start investing in real estate and found this building I'm quite interested in.

List price 90k (i'd hope to get that down to 80k), closing costs at 5% 4500. 20% Downpayment so out of pocket 22,500. (Probably will need a couple hundred more for inspections etc) so lets put it at 23000.

Location Milwaukee.

Rents currently 2200 for the four units.

I'll outline the mock analysis and would love some input on that.

Repairs to rent - Looking at no repairs as there are recent rehabs (minor) and all units are rented.

Monthly PITI 639 on a 4% 30 year fixed (i'm at 750 credit score, should be able to get that, taxes roughly 3k a year).

50% rule will give 1100 for vacancy and operating expenses. (does this include property management? I'm not planning to drive 100 miles every time tenant has a leaking pipe or a bulb burns out).

So I'm looking at 1739 outflow for a net cash flow per month of 461 which is an annual cash on cash return of 24%.

Or I could get a 15 year fixed loan and have (according to my back of napkin calculation) a return of about 15.6% and pay the mortgage down much quicker. 

Now, that is all upon a proper inspection of course.

I'm 99% sure there are huge gaps in this analysis and it needs a lot more work (first of all i need to inspect the property and see for myself the quality of tenants, quality of rehab done, condition of major capital items such as roof and foundation etc). 

Any input will be appreciated.