Analysis of a fourplex

[Anthony Barbato]

Hello,

I am planning on buying a 4plex property in the Bay Area using the 3.5% FHA loan on Jan 30th 2020. When I look for cash flowing properties, however, none of them have enough rent income to cover the debt service and expenses using the Bigger Pockets cash flow formula that I have included in the link below.

3420 Carlson Blvd:

https://maxebrdi.paragonrels.com/publink/default.aspx?GUID=3710d426-464b-44a0-925a-dd3302c8787f&Report=Yes

Link to deal analysis calculator, both FHA and conventional financing:

https://drive.google.com/file/d/1-uWNXgtOPKqt0Vx7I...

Is it possible to find a 2-4 unit property in the Bay Area that will cover debt service and expenses? If so, please include examples.

[Stephen G.]

The short answer is "no", the longer answer is that it's really difficult. That property probably sold for north of $1.1MM since it's vacant, recently updated, and close to BART. Each unit has market rent of $2400/month (example unit with similar rent - https://www.trulia.com/p/ca/el-cerrito/5927-central-ave-el-cerrito-ca-94530--2189133966

Assuming the gross annual is $115k, you're looking at a purchase price of at least 10x, maybe 12x since it's vacant, move-in ready, and close to BART. Assuming a close of $1.250M, your monthly PITI with 3.5% down is going north of $8k/month. That makes your $800/month for a 1bedroom near bart - not bad!

If you need to purchase below $1MM, you'll need to set your sights on East Oakland.