Is this worth looking into? $120,000 4plex

[Caleb Mclamb]

Hello BP, 

I realize that I am not including lots of information and that there is lots and lots of research needed to analyze a property. That being said, I am just asking if this property is worth further analysis. 

It is a 1 bed 1 bath 4plex

asking price is $120,000

gross monthly rent is $2200

nothing is stated about any repairs being needed and the pictures seem to show that to be true. 

The zip code has a small growth of population, is 38% renter occupied, has decent rent prices overall, and a very avg. amount of rental units. It is in a C neighborhood that is not a high crime area.

I feel that this 4plex has great potential being that it almost meets the 2% rule, and that it is is undervalued based on a 10% cap rate. 

Using the 50% rule it would cash flow at $640 a month (after my mortgage payment on my 20% down 4% loan) which comes to $160 per unit. 

Once again, I have done a very brief overview of the property and am wondering if it appears to be a steal?

[David Moore]

Greetings Caleb: 

I generally see a place first before I start doing number crunching. In my market, some of the deals that make a lot of sense on paper don't work so well when you see them in person.  But it might also be a good deal.  It cannot hurt to go look at it, and get impressions.  One piece of advice J Scott gives in his books is to go look at a bunch of properties for sale, just to get an idea of what types of homes are out there...to give you a baseline for what condition properties are in.  Then run the numbers.  I looked at a place once in my home market that the sale fell through on.  I was running the numbers, and then looked at it. The basement and outside condition had me seeing a cash cow.  Then I saw the 2nd level.  The more I looked, the more $$$ I saw had to go in, making the deal worse and worse.  I passed because the repair cost and the layout just didn't look profitable.