Another Quad Analysis

[Darin Hancock]

Hello BP members. I am in the market for my first investment property and there is one that is close to looking good. I have read through several posts and understand the 50% rule, and the 2% rule. The problem with the 2% rule is that I don't think it is possible where I am. I wanted to post the numbers and get your feedback.

The area I am in is outside of St. Louis about 40 miles, small town of about 4000 people.

They are 2/1 units.

Total rents $24420/yr
Taxes $1780/yr
Insurance $1286/yr
Water/Sewer/Trash $2760/yr
Vacancy 5%

The building is only 3 years old, the HVAC consists of 2 small window air conditioners and a small heater in each room. I know the heaters are not expensive to replace because I have one just like it in our bathroom. The reason I am adding this information is because I feel the big expenses down the road will be relatively small.

The seller is asking $159000 which I have no intention of paying. I have thought about offering $125000

My financing looks like this.

75% of cost will be financed at 4.1% for 30 years.
I plan on putting $10,000 in cash down and financing the rest through a HELOC at 4.5% for say 10 years.

I know I don't meet the 2% rule but like I said before, I don't think I can get that in my area. This is by far the best deal I have found in my area.

What are your thoughts? Any feedback would be appreciated.

Thanks,

Darin