Analyze my first deal!

[John Warren]

Hi everyone,

So I am about to close my first deal next week. I would love to hear your thoughts on the deal. The property is a four unit building that I am purchasing for $195,000 with 20% down. I used a cash out refi and a HELOC to get the money for the down payment, so I am already being pretty creative to get this done. I calculated all of my costs, and it appears that the place should cash flow to the tune of $800-900 per month after paying the mortgage, taxes, insurance and bills.

The place is going to need some "sweat equity". I have a long list of items to repair from the town inspection, but I shouldn't have to put more than $5,000 into the place to get past the inspection. The worst item long term is that the seller had the roof replaced without replacing the skylights. I will definitely be fixing that right away! I also will probably have to do some updating to kitchens and bathrooms in two of the units down the line, but I am handy enough to do them myself.

The best part about the place is that I am buying the least expensive four unit that has sold this year (no comps to be found!) and that the rents are all under market value. One unit is at least $150 under the market price!

Let me know what you all think!

[Rob Beland]

Looks pretty good. When you ran your financial analysis did you factor in vacancy and some % of rents going towards capex for the future? A lot of investors miss those two items and it ends up hurting their cashflow in the future.

Good luck!