Fourplex Deal Analysis

[Garrett Grove]

Asking Price: 259000, the most I would offer is 249,000
Downpayment required, 25% conventional: 62,250
Interest+principal, @4.5%: 946.23
Taxes, verified: 3000/yr,250/mo
Insurance, verified: 1700/yr, 142/mo

Rental Income: 775x4=3100 (3/4 units are currently occupied, I would live in the other)

Expenses:
Maintenance, 10% rent=310
Vacancy, 10% rent=310
Property management, not required for now, but include, 18% rent=558

NOI: $584/mo.

Cash on cash return=10.26%.

Any thoughts? The first few years would be much higher returns, as I would be the property manager. Cash on cash return=20%

The tough part right now is finding 25% down, I have a few potential investors, just pitching my case and trying to get the funding to me in a tax-free manner is a little trickier.

[Aaron Montague]

How about FHA, VA or Homepath Owner Occupied Loans? I'm pretty sure you could drop your down payment % to 10% under Homepath and 3.5% under FHA. VA would be 0%.

18% for property management? That is quite high. Most professional companies are only going to get you for 10% plus fees. I generally hire individuals for 8% or so.

Are the utilities divided? Most places I've seen have electric divided, Sewer and Water NOT divided and are a toss up on heat. I'd think about dividing all them ASAP.

Overall you've used highly conservative numbers and it the deal still looks solid. Are the rents at market rate? Can they go higher over the next 5 years? Can they go higher tomorrow?