Hemet-Inland Empire-4plex numbers for newbie advice-Randy B.

[Randy Brockett]

Hello All,

Any advice for a first time investor. Any thoughts on a live in flip, small multifamily units or doing both. I will need a place of my own coming up in the near future. I am interested in owner occupied FHA because of the smaller down payment. I have to consider PMI going this route and I would like to consider all options. Here is a 4 unit complex in downtown Hemet which advertises as a beautiful park like setting and serene surroundings. The unit looks good for area, but I do know the area and it is a class C neighborhood at best, here are the numbers. Any advice would be appreciated and thoughts on what I am missing, capital expenditures, etc.. Thanks again.

Building year: 1962,   .42 acres,   100% occupied

As advertised highlights:

• Beautiful apartment in serene park like setting.
• Like new, with new roof, windows, stoves, water heaters,heaters, & plumbing.
• Private back yards for each tenant. Exclusive parking for each unit.
• Very stable long term tenants.
• 8.51 GRM, 8.00% Cap, and 14.54% Cash on Cash Return on actuals!!
• 8.16 GRM, 8.48% Cap, and 16.48% Cash on Cash Return at market rents!!

Purchase price:         235,000

Down payment 25%: 58,750

Balance: 176,250 @ 4.12% for 30 yrs. / 854.00 per month or 10,244 debt service/year

Actual rental income  575.00 x 4 = 2300 per month

Annual gross rent:           27,600

Less vacancy 5%             1,380

Effective rental income  =26,220

Real estate taxes       2,867            1.22% times listing price assessor rate

Property insurance       700

Off site management    900  Tenant manages for 75.00 per month, includes gardening

Water                           2100.00

Common area electricity 120.00 yr. / 10.00 monthly, light in parking, light in laundry

Trash                                744.00 Actual billings, 62.00 monthly

Total operating expenses 7,431.00          28%

NOI 18,789 8% cap rate

Debt service                     10,244                 1.84 debt coverage ratio

Cash flow before taxes 8,545.00 14.5% cash on cash, 75% LTV, 4.12 APR

IF I USE 50% RULE HERE I WOULD BE AT 2866.00 CASH FLOW/238.00 MONTH

Assessed/Appraised Values
Land	101,050	43%
Improvements	133,950	57%
Personal Property
Total	235,000	100%