Newbie looking into 4-family for first deal

[Nicholas Elliott]

Hey everyone. I'm thinking about pulling the trigger on a 4-family in the Cincinnati area as my first REI deal and was hoping to run it past a few of the more experienced investors here on BP. I would be purchasing it as an owner-occupant and also taking advantage of the Neighborhood LIFT $15k grant that is currently available in the area. The building is 124 years old with a stone foundation. I visited the building on a rainy day and noticed water was seeping through the basement walls in multiple spots. I've lived in places with leaky basements before that didn't seem to be an issue but it did throw up a red flag. Does anyone have any experience with this or recommendations? The rest of the building looked great with no signs of foundation settling (not an expert but I was impressed by the condition of the units). Anyways, here are the numbers:

LP: $150,000

Rents: $30,300

Taxes: $4,280

Insurance: $1,100

Utilities: $5,080

Vacancy (10%): $3,030

Repairs (8%): $2,424

Prop Mgmt (10%): $3,030

Mortgage: $7,980 (3.5% down plus $15k from grant money)

PMI: $1,500

Net: $1,876

I think I've been very conservative with my numbers but want to be sure I reserve enough in case something goes wrong with such an old building. I have not been through the eligibility review for the grant program so the alternative would be 20% down and no PMI. I plan to manage it myself for the first 5 years (have to remain owner-occupant for 5 years for the grant program) so the 10% set aside for prop mgmt could actually go towards cap ex.

Let me know if you need more info or if I need to clarify anything.

Thanks!