buy and hold 4 plex

[Patrick McGowen]

I know I am not as aggressive as most people on bigger pockets. Actually my immediate reaction when my deal was accepted was “I asked too much, how much money did I leave on the table.” Still here is my latest deal.

4-plex in rural area. Not much economic growth, but stable. Bank owned, but listed on MLS. Built in 2008 and “like new” condition. Inspection found only minor issues. Historic vacancy has been around 7-8%, but I think with some minor landscaping can increase curb appeal and be more competitive with older apartments in the area. Total gross rent 2100/month. I offered $168k with requirement of seller financing 10% down (90%ltv). Following are monthly expenses:

Repairs: say 100

Vacancy 210 (10%)

Property management 168 (8%)

Tax 201

Insurance 89

Garbage 35-45

Water/sewer 156-170

Lawn care/snow 35

This is close to 50% expenses. Lawn care could be reduced/eliminated with some landscaping I have planned.

With closing costs and landscaping I will be in for about $20,000 (I may wait on landscaping until spring and use cashflow for some).

Best part of deal is with 10% down I can actually get a cash-flowing property without a huge time investment. Cap rate is 7-8%. My cashflow should be about 15-20% return. Not counting on appreciation, but amortization is maybe another 15% return.

Appreciate your thoughts / feedback.