Tri-Plex Analysis Help Please

[Ralph R.]

I am looking at adding an out of state triplex to my rental properties.  Normally I can figure This stuff out on my own.  This is my first time trying it with non conventional financing. 

  Before we get all excited about not trusting the sellers word on things, I am aware of doing my due diligence, and will get  hard numbers before proceeding with any offer.  The numbers I have used here assume a full price offer of $135,000 and I am also aware that I can negotiate for a better price.   

1)  The seller found the Hard money Lender.  Is this a Normal thing?  How can I check the lender out?  I have not spoken to him yet, the seller told me the man had done loans for 6% in the past. for purposes of discussion I have used this no.   

2) The seller will carry a second loan for $23,750 for interest only (118 month) as well.

3)  I will put $10,000 down at closing.

Here's the numbers.

Hard money loan for $101,250.  at 6% this is $607 per mo.

Buyers 2nd is $23750, for a payment of $118 a mo.  (interest only)

Annual rent $20,400

Vacancy $1700 (1 month rent)

taxes $65 year (hard number)

Insurance $1500 a year (hard number)

Management $1870 (hard number incl. vacancy's)

Repairs/maint. $1700 per year

electric $480 per year (sellers number)

advertising $100 a year

water $984 (sellers number)

Trash $452 per year (sellers number)

Is It prudent to pursue this farther, Assuming there is no rehab, and remembering all units currently  are full with 1 year leases in place?

furnaces are less than 5 yrs old, most flooring is new, and there is little carpet throughout.water heaters, several windows and 1/2 the roof is new.  property is priced at close to full value.

Thanks in advance!

RR 

[Ralph R.]

Matt

The CAP is 8%. that's the net operating income/sales price. $10964/$135000. Net operating income (NOI) is the total potential income minus vacancy minus operating expenses. There are property analyzer calculators both here on biggerPockets, and online. check out dinkytown on the web.

I forgot to say the hard money lender is only a 2 year loan.  Sorry old age kicking in.  The 2nd would be behind the hard money loan, which would pay the banks current loan.  Most conventional mortgages (if not all) have a due on sale clause.  If the seller sells me the property without paying the existing mortgage off, it would trip that clause and the mortgage company could foreclose on the property, and we both would loose out if he could not pay the loan off, so yes that's why the hard money lender is needed.  He pays off the existing first mortgage.  Cash flow is about $169 a month witch at 50 dollars a door is a bit lower than I like.  That's why I'm not sure about this one.  I normally have a 20-30% down that changes all these numbers a great deal.  In this case im borrowing all or most of the down.