Potential first MFH purchase

[Omi C.]

Hi everyone,

I'm considering making an offer on my first property. I'd love to get the advice and wisdom of the BP community on this deal. What have I missed??

The property is a 4-plex in a nice family/community oriented suburb. Each unit is a 3/2 with a garage. Schools are above average. Crime is non-existent (1 theft in the last 30 days, summer was the same). Building was built in 1990. The property is fully rented at present.

Here are the numbers:

Purchase Price: $230,000

Down payment, 25%: $57,500

Loan amount: $172,500.00

Loan payment (conventional, 5%, 30 yr): $926.02

Monthly rent: $3100.00

Monthly costs (see below): $1,456.50

Monthly NOI: $1,643.50

Monthly Cash flow: $717.48

Yearly CCR: 14.97%

The monthly costs include:

5% vacancy

10% Maintenance

10% Capex

9% Property Management

~1.5% Property taxes

~0.6% Insurance

I normally would put vacancy at 10%, however the tenants in the area seem to stick around for a while and it seems unrealistic to assume that every unit will turn over every year. 5% to me means that I am planning on 2 units turning over every year, and that it won't take longer than a month to fill those units again.

I am also expecting the 20% of Maintenance+Capex to cover turnover costs. It seems reasonable for a newer building like this, but I'm not sure?

These numbers are my best shot at "worst case within reason", and 15% CCR seems like a pretty good worst case.

What do you gals and guys think?

Omi