Just closed on my first deal- 4 plex

[James Stoughton]

Like the title says, I closed on a 4 unit apartment building in Bangor, Maine! It took about a month longer than anticipated because the seller was just a mess. The asking price was $116,000 and we closed on $100,000 (The appraisal came back at $138,000)

I put 25% down with about 8k in closing costs (including several points, taxes, insurance) so my out of pocket costs are $33,000. Monthly payment on 74,000 is about 350 a month or $4200 a year.

The 4 units are a 4/1,3/1 and 2 2/1. 3 of the units are occupied but all them are below market rent totaling $1700 a month. I plan on getting them all up to market over the next year. Here's how it will look...

4br-$900 (currently $500)

3br- $800 (currently $600)

2br- $700 (currently $600)

2br-$700 (currently $0)

Total projected income $3100 a month or $37,200 a year. With 10% vacancy it $33,480.

Expenses- monthly yearly

Taxes- $220 $2640

Maintenance-(10%) $310 $3720

Insurance- $130 $1560

Prop mgmt. (10%) $310 $3720

Utilities- $100 $1200

Landscaping/ plowing - $50 $600

Heating- $700 $8400

Total- $1,820 $21,840

So if I've run my numbers correctly my NOI should be 33,480- 21,840=$11,640 a year. After financing $ 7,440 a year.

Now that I've got that all written out, I see that I really need to focus on getting the rents up to market as well as cutting some expenses. Heating costs are really a killer in Maine so I'm going to focus on improving the energy efficiency by replacing the old windows and insulating the attic. I also just found out about heat pumps which run on electricity (as opposed to oil) that can pull heat out of the air. I have to see if this is feasible in my property but if it is I might be able to cut heating costs by 50%.

I have to say that if it wasn't for bigger pockets I probably wouldn't have had the confidence to buy a rental yet. There really is a ton of info on this site. I just want to thank everyone here for all the advice and help that they give.