Should I avoid this property due to high monthly maintenance fee?

[Bhanu P.]

Hello,

Hope you are doing great.

Quick Introduction about me: I am newbie Investor with 3 SFR positive cash flowing properties - all are Buy and Hold Rental properties - I am able to Traditional finance for 30 years fixed up to 100% of purchase price (by executing 'Buy-Rehab-Rent-Refinance' strategy).

My new venture: Seller accepted the offer of 95K that I made on a fourplex property located in Houston,TX and I like to find out the next steps on this.

Details about the property:

Good

-This building got all 4 units rented (525 … 565 … 550 … 550) with total monthly rent of 2190.

-Tenants staying there since (24 months, 14 months, 6 months, 6 months)

-Leases are going to expire in (24 months, 6 months, 6 months, 6 months)

-Security deposit (295, 295, 295, 125)

Bad

- Year of construction: 1981

Ugly

(This fee is supposed to be a deal killer but I think the risk is worth taking - I am seeking your expert opinion on this subject).

- Monthly Maintenance Fee of 760$ - Seller is claiming that this fee cover pretty much everything except inside the property… the insurance on thru HOA is enough for most banks… also cable/trash/grounds/day-night security…

I prepared 2 Reports using Bigger Pocket’s Rental property calculator a) With 100% mortgage b) With 75% mortgage.

During the preparation of these Reports, I considered the potential future expenses by having the following assumptions.

-Vacancy Rate of 10%

-Repairs and Maintenance 5%

-Capital Expenditures 10%

For the sake of simplicity, I assumed the following to be 0%

-Property Management Fees

-Future Income Increases (rent increase)

-Future Property Value Increases (property tax increase)

-Future Expenses Increases (Maintenance fee increase)

On paper, this property is cash flowing at $167 (0% down) and $295 (25% down) - I am hoping to leverage as much as possible on this property through refinance in future & I believe based on the rental income, this property can support leverage.

I would like to know your thoughts around this and if you think this deal is one that we should proceed. Thanks so much in advance!!!