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Updated over 1 year ago,

User Stats

11
Posts
3
Votes
Andrew Helen
  • Investor
  • Temple City, CA
3
Votes |
11
Posts

Triplex Investment in South Central, Los Angeles Analysis / Advice

Andrew Helen
  • Investor
  • Temple City, CA
Posted

Hello BP! I have entered into contract for a Triplex in South Central LA for $345,000 and would like to get your advice on whether I should go forward with this deal. Here are the numbers:

Basic Information:

  • Built in 1925
  • Triplex with 3 separate units (2BD / 1BA each unit)
  • Landlord pays trash/water, tenant pay all other utilities

Terms:

  • Contract Price: $345,000
  • Down payment: 25% ($86,250)
  • Mortgage payment at 4.25% ($1,273)
  • Improvement: $2,500 (Cosmetic)
  • Lease at $3,000 total
  • Closing cost: 2.5% of Purchase price ($8,625)

Financials – Annual Number:

  • Annual Rental Income: $36,000
  • Annual Expenses: $16,810 (w/ Property tax, Vacancy, Repairs, Utilities, PM and Insurance)
  • Net Operating Income $19,430
  • Mortgage: $15,275
  • Total Cash Flow: $4,155
  • Total Equity Accrued: $4,362
  • Total Cash ROI: 4.27%
  • Total ROI w/ accrued equity: 8.75%

Other:

  • For anyone not familiar with Los Angeles, this is in a B/C class neighborhood
  • Rental market is hot in this area of town, normally there are no vacancy (I have estimate a one month vacancy/loss rate)
  • Rent control area
  • I am familiar with this area, have bought other properties a few blocks from this triplex
  • I self-manage all my properties and will continue to do so for the next few years till I get to 20 units+. This increase the return to 6.98% and 11.46% w/ equity accrued.
  • Investment goal: Being in LA, I will never meet the 2% rule. However, I am just more comfortable investing in the same city I live. The goal is to hold for the next 5-10 years while generating cash flow and sell when the market is great.
  • Exit strategy, will do full rehab when it is time to sell to generate forced appreciation and take advantage of the LA/California market appreciation (sensitive topic)

Thank you very much

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