4plex Analysis-too good to be true?

[Chris F.]

Here are the numbers:

1-3Bd

2-2bd

1-1bd

2k sq ft, full basement

fully rented @2100/month gross

going for 74,900 short sale, an inheritance that the owner doesn't want to deal with

seems like a great deal so far, but here's the kicker- 3/4 of the units are rented by the former owners(uncle) family members.

I'm thinking worst case, I have to do 3 evictions, but given the numbers, still worth the risk?

[David Beard]

Not picking on you, Chris F., but the problem with these kinds of posts is that just a few numbers are given with no context whatsoever. There are plenty of places in Michigan, or Cincinnati where I invest primarily, or most cities in the midwest, where the neighborhood/submarket would be so poor that it would be a terrible deal even at an apparently good gross rent yield.

Here are just a few things that are critical to determining if it's a "good deal" for you:

What is the grade of the neigborhood (sub-market and broader area)?

What is the grade of the property (including age, condition, deferred maintenance needed, how outdated are units)

Who pays water? Heat? Hot water?

What is the tax assessment and tax bill?

This is a cross-country investment. How will it be effectively managed in what is bound to be a low-income area with these types of rents.