Sanity Check: 5 Unit Opportunity

[Jon Keeney]

Hi All,

This is my first post on here, but I've been doing a lot of reading on BP. What an awesome resource!

Anyway, I have a potential deal for a 5 unit property. The numbers are as follows:

• Purchase Price: $155k
• Gross Monthly Rent: $2,300
• Taxes (annual): $5,270
• Insurance(annual): $1,500
• Water/Sewer/Trash (annual): $2,100

I'm also budgeting the following:

• 10% Monthly Rent for Property Mgmt
• 10% Monthly Rent for Maint.
• 10% Monthly Rent for Vacancy

A few questions if you would be so kind to weigh in. First, am I missing anything here? Secondly, do my budgetary numbers look right based on the experience of others?

Based on the numbers I'm using, it's not cash flowing the $100 per unit that I was shooting for, but I've tried to be conservative in my estimates (and at least in the beginning I'll be managing it myself). The property is fully occupied by "long-term" tenants, but obviously that can change. Three of the units have been fully renovated, but two will need some work when they're turned over next. I'm budgeting $3-5k for each, mostly cosmetic. I'll also be raising rents on those units once renovated, prob. $100 each raising the gross total rents to $2,500.

Any input would be appreciated!

Jon

[Jon Keeney]

Thanks @Mehran K. ! I did forget to add lawn/snow removal on this, good call. Based on the competition I've seen, there would be some room to move rents up $50-$100 per unit. This property has 3-1bd, 1-2bd, and 1,3bd. The one bedrooms have been updated, and two and three beds need work. That said, the two and three beds are renting for below the 1 beds at this point.