First Multifamily Fourplex in Chicago

[Neil S.]

Hi all,

Buying my first multi family, a fourplex in the Southside of Chicago. This is a turnkey property that will be completely renovated with brand new finishings and will be managed by the same company. It is in a B/C class neighborhood, it's on a nice block but the overall area is a bit rough. My goal is long term buy and hold.

Purchase Price = 355,000

35% down (lack of comps) = 124,250

Closing Costs = $4000

Rent = 4400/month (26,400/yr)

Expenses (assuming 50% rule) = 2200/month

Net Income = 2200/month

P&I (5% 30 years) = 673/month

Cash Flow = 1527/month (18,324/yr)

Cap Rate (26,400/355,000) = 7.4%

Cash on Cash Return (18,234/128,250) = 14%

The seller's internal pro forma numbers have it at $1797/month cash flow (4% vacancy, 4% maintenance, 8% mngt) for a 10% cap rate and 16.82% COCR but to conservatively I am using the 50% rule.

I am quite busy with my own business so don't really have the time to do renovations and manage myself which is why I am doing a turnkey. What do you think of this deal? Thanks!