3 Plex in historic area

[Paulina Purnama]

Hi guys, I'm interested in a 3 plex close to the downtown area I'm in. Lots of old houses but the surrounding area is going through a re build and lots of historic houses in town.

It is a older SFH that was converted to a 3 plex. Built in 1957.

Unit 1: Rents for $825 and than INCLUDES heat and electricity

Unit 2: Rents for $550 and INCLUDES heat and electricity (city program where rent payment is pretty much guaranteed every month)

Unit 3: Rents for $700 and that only includes heat (electric is on separate meter)

So total income is $24,900 - 8% Vacancy = $22,908 annual income.

Sale price is $165,000

Seller states annual heat (for all units) + electric (Units 1&2) = $3400 (I am in the process of verifying via his bills)

He did not give a maintenance cost but I'll assume 10% of gross rents = $2490 - Is this reasonable for a older building?

Property Management @ 10% = $2490

Lawn and snow = $1000

Property Insurance = $1400

Real Estate Taxes = $1365

He recently did some cosmetic upgrades (most baths and kitchens are newer) and also upgraded an old oil heater to electric heater.

Roof is on the older side probably 15 yrs old.

He also did some water seepage / drainage work recently putting drain tiles and land fill dirt to slope the water.

Would this be a good first property?

My lender requires 25% down for investment properties and I'm getting 3.75% for 15 yr loan vs 4.375% for a 30 year.

First off is the property a decent deal and second would it make more sense to go for the 15 yr or 30 year? I don't need the cash flow. This would be for buy and hold and to minimize my tax burden

Cap rate: 6.52%

Cash on Cash @ 30 yr loan: 7.74%

[Josh Nix]

It's always so hard for me to know if something is a good deal for you or not because I don't know the area of the property, the actual property and most importantly your real estate investment philosophy.

I don't know how this is going to minimize your tax burden but it seems like a decent first deal for someone who doesn't need cashflow. I personally wouldn't do it but I'm also seeking cash-flow and I'm a hands on investor.