First Deal in Chicago - How did I do?

[Polina Goncharova]

Hello BP Friends,

I've been strolling the site and listening to podcasts religiously and I finally have my first four flat deal-

Southwest side of Chicago - McKinley Park

-Completely rehabbed 2 years ago

-All units are the same 2bd/1b

-Fully rented, Market rate for rents apx $800.

-Prop taxes currently are $4,800 without homeowner exemption (using this number for below)

-Tenant pays own utilities

-I will be managing property

Purchase Price - $280,000

Down 3.5% and $5,000 closing costs

Rent (m/m):

Unit1 - $965 (sec 8)

Unit2 - $950 (Sec 8)

Unit3 - $700

Unit4 - $800 mkt (will live in this unit)

Total Income - $3,415

Expenses:

8% mgmt - $273

8% vac - $273

8% maint - $273

Utilities - $100 est

Prop Tax - $400

Ins & PMI - $380

Total Expenses- $1,699

NOI - $1,716

Debt Serv - $1,329

Monthly CF - $387

Yearly CF - $4,600

Cash In - $15,000

Return - $4,600

COCR - 30%

This CF has potential to increase by decreasing taxes and potential to increase rents. Speaking with the owner, tenants are very hands off and quiet, since everything has been rehabbed from wiring to high efficiency heat, roof, etc, there is not much anticipated maintenance. This is basically a turn key property, great for a first timer!

Any thoughts? Should any of my estimates change due to property condition? Are my calculations correct?

Thank you!

[Joel Owens]

Polina looks can be deceiving. You need to find out if your contractor is qualified to advise you on all aspect of a building.

Looking at lipstick and words like "completely rehabbed" are throw around all the time.

My clients will look at a 100 unit property. Flyer will say completely remodeled. We get in there and they replaced some mechanicals but mostly carpet and paint with countertops etc.

It's like an old car. I can take the dents out of it, paint it to look pretty, slick the tires BUT until I look underneath it and pop the hood to see what makes it go I can't assess the real condition of the property.