Initial stages of triplex evaluation Mpls area

[David Wiebelhaus]

Hi all,

I'm just getting started with my (hopefully) long-term REI buy/hold RE career. I have ~80k cash available, but am looking to leverage w/ 20% down or whatever is cheapest for a conventional loan.

First of all, before getting to the triplex numbers, as it's my first home purchase, should I be using a different type of financing other than traditional 20% down? I am open to owner occupying long enough to satisfy any conditions required, otherwise would prefer to not move. If I do owner occupy, it doesn't change my investment numbers, as I would just consider myself paying the market rent.

Triplex (C neighborhood, off a main street) - List price $315,000

Current tenants are on month-to-month leases but have been there for 1+ years.

REVENUE

Unit 1 Rent - $1175 - section 8 pays $1000 - month-to-month lease since Apr 2010

Unit 2 Rent - $1200 - section 8 pays $660 - month-to-month lease since Jun 2012

Unit 3 Rent - $1100 - month-to-month lease since Oct 2012

All 3 units are exactly the same & all include a parking space, so I'm not sure why different rents are being paid. Similar houses/condition (based solely on pictures) are ~$1200

TOTAL REVENUE: $3475

EXPENSES

50% rule - $1738

Debt servicing @ 4.5% - $1277

TOTAL EXPENSES: $3015

Cash flow: $460

Cash on cash @ 20% down - 8.77%

CAP rate - 6.62%

Is this a no-go or should I pursue it further? I was told it was turn-key by the selling agent, which is why I didn't include anything for initial expenses outside of the 50% rule. I don't want to bother the tenants by asking for a showing until running the numbers and asking investors smarter than me :)