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Updated almost 10 years ago, 12/16/2014

User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts

Looking into buy my first 4-plex in a metropolitan area in Central Valley California -Did I get the numbers right?

Ariel G.
  • Investor
  • Fort Lauderdale
Posted

The Property is located in a class C area, right in front of a nice park and close to downtown, shopping malls, churches and a hospital.

I walked there at night and I felt safe. Also, during the day I saw families and low traffic. 

Everything is new, with resistant materials and decent finishing. All appliances: including dishwasher and washer machine in every unit. it's a turn key property.

Am I missing something? I know there are several variables, but in general and roughly, from 1 to 10 what would be your rate for this investment?

Any tips will be greatly appreciated :)

(3) 1bed 1bath  and (1) 2bed-1bath

Purchase price is 225,000

Monthly Income:
$2,440.00
Monthly Expenses:
$1,708.87
Monthly Cashflow:
$731.13
Pro Forma Cap Rate:
8.57%
NOI:
$19,718.00
Total Cash Needed:
$50,000.00
Cash on Cash ROI:
17.55%
Purchase Cap Rate:
8.76%
Total operating expenses:Mortgage expenses:
Vacancy:$122.00CapEx:$122.00
Electricity:$20.00Water:$50.00
Sewage:$50.00Garbage:$20.00
Insurance:$50.00Management:$122.00
P&I:$912.03Property Taxes:$190.83




User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts
Ariel G.
  • Investor
  • Fort Lauderdale
Replied

I apologize, but for some reason the format I used to show the numbers doesn't work properly here. Please see below.

Monthly Income:

$2,440.00

Monthly Expenses: $1,708.87

Monthly Cashflow: $731.13

Pro Forma Cap Rate: 8.57%

NOI: $19,718.00

Total Cash Needed: $50,000.00

Cash on Cash ROI: 17.55%

Purchase Cap Rate: 8.76%

Total operating expenses: 796.83 ($9,562)

Mortgage expenses: $912.03 ($10,944)

Vacancy:$122.00

CapEx:$122.00

Electricity:$20.00

Water:$50.00

Sewage:$50.00

Garbage:$20.00

Insurance:$50.00

Management:$122.00

P&I:$912.03

Property Taxes:$190.83 

User Stats

4,456
Posts
4,294
Votes
Ben Leybovich
  • Rental Property Investor
  • Phoenix/Lima, Arizona/OH
4,294
Votes |
4,456
Posts
Ben Leybovich
  • Rental Property Investor
  • Phoenix/Lima, Arizona/OH
Replied

Pay $150,000 and you should do fine :)

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User Stats

6
Posts
0
Votes
Kyle Overman
  • Chicago, IL
0
Votes |
6
Posts
Kyle Overman
  • Chicago, IL
Replied

@benleybovich

why 150,000? dd you use a mortgage calculator to determine the new payments for that? and p&i?

User Stats

347
Posts
169
Votes
Jeff Zimmerman
  • Real Estate Agent
  • Fresno, CA
169
Votes |
347
Posts
Jeff Zimmerman
  • Real Estate Agent
  • Fresno, CA
Replied

Hey Ariel, i'm slightly confused, maybe i missed something. You listed your monthly cash flow at 731.13 which would give you a yearly NOI of $8774.76. You listed your NOI at 19,718 which would give you a monthly cash flow of $1643. which one is correct?

User Stats

1,316
Posts
569
Votes
Nathan Emmert
  • Investor
  • San Ramon, CA
569
Votes |
1,316
Posts
Nathan Emmert
  • Investor
  • San Ramon, CA
Replied

5% repair and 5% CAPEX are both pretty low... what about cutting the grass? Those utilities numbers seem a bit low but if you've verified them I'll take your word...

IMO, expecting your operating expenses to be 33% WITH property management is beyond optimistic...

User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts
Ariel G.
  • Investor
  • Fort Lauderdale
Replied

Hey Jeff the NOI didn't include debit service, that is why, I used the BP calculator.
Thanks a lot for taking a look at it!

User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts
Ariel G.
  • Investor
  • Fort Lauderdale
Replied

Hey Jeff the NOI didn't include debit service, that is why, I used the BP calculator.
Thanks a lot for taking a look at it!
Also thanks Nathan for tip on the expenses, I'll recalculate it, the building just went through a massive renovation so I thought it wouldn't require much maintenance in the first few years.

Account Closed
  • Investor
  • Honolulu, HI
1,698
Votes |
3,894
Posts
Account Closed
  • Investor
  • Honolulu, HI
Replied
Originally posted by @Ariel G.:

Hey Jeff the NOI didn't include debit service, that is why, I used the BP calculator.
Thanks a lot for taking a look at it!

What is debit service and why would it be included in operating income? 

User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts
Ariel G.
  • Investor
  • Fort Lauderdale
Replied

Hi Bob,

The debit service in this case would be the mortgage payment.

Account Closed
  • Investor
  • Honolulu, HI
1,698
Votes |
3,894
Posts
Account Closed
  • Investor
  • Honolulu, HI
Replied
Originally posted by @Ariel G.:

Hi Bob,

The debit service in this case would be the mortgage payment.

OK, That would be DEBT service and it is not considered an operating expense so it does not affect NOI.

User Stats

51
Posts
15
Votes
Ariel G.
  • Investor
  • Fort Lauderdale
15
Votes |
51
Posts
Ariel G.
  • Investor
  • Fort Lauderdale
Replied

I was just explaining Jeff that the NOI didn't take into account the mortgage payment, thus why the cash flow was $731.13 as oppose to $ 1.643. I apologize for the misspell before. Please correct if I am wrong.