Very new to REI, ran numbers, too good to be true. HELP!

[Frank Crianza]

First of all, thank you for clicking on this thread, there are a million of them out there and I promise not to waste your time.

So here is the scenario:

Multi-Family property (4 units) - Listed @ $205,000, on market 65 days.

Estimated Acquisition: $195,000

Realistic rent: $3000/mo ($750/unit)

Property Taxes/yr: $5200

Insurance/yr: $2400

Planned Maintenance/yr: $1200

Estimate Vacancy: 5%

Down Payment: 25%

Management Fee: 8%

I have just recently gotten into the concept of REI and I've read all of the forums, blogs, etc. of investors having a hard time trying to find a good deal in the Houston area market, and I found this property quickly, in a public method of discovery with very little effort in about 45 minutes of searching.

Financing the entire investment (through very creative means, which took me MUCH longer to figure out compared to finding this deal) seems like a no-brainer to me, but I'm scared I got something wrong in the math and this is not as good of a deal as I believe it to be.

I'm a newbie, I quit my job in the Oil & Gas industry, enrolled in real estate school, completed it in 3.5 weeks and I take my test 9/4/18. I have dedicated literally everything I have to learning and perfecting my role in this industry. I would welcome any advice/suggestions, and in appreciation to that advice I would welcome the opportunity to be able to return the favor in the future.

[Tony Castronovo]

Your numbers seem reasonable. Part of the decision is not just “do the numbers make sense” but whether this deal aligns with your goals and investing model. For example, I don’t think you mentioned whether the property needed repairs. Is there an opportunity to force appreciation? 

My strategy has evolved to focus more on equity growth and then the cash flow will follow. That’s a different approach than focusing purely on cash flow. For someone without a W2 I would imagine this would be a pretty good investment. But if there’s no equity capture you’ll want to hold it for awhile. Hate to sell in a couple years and eat up all those cash flow gains just in commissions and closing costs.