Help with analysis on first deal

[Joe Rinella]

Hi everyone,

I've come across a 4 family unit deal in Western Massachusetts that I'd like to put an offer on, I'd just like some input from everyone on the numbers before I go forward with it. This is my first deal so I want to make sure I'm not missing anything.

Property Cost: $200,000

Down Payment: 25% (50,000)

Mortgage terms: 30 year

Mortgage Rate: 5%? 

Anual Taxes: $4128

Gross Monthly Rent: $3,225 (the current tenants are underpaying. When they leave we will raise rents to total $3,900 or $4,000

Monthly Insurance: $194

Management fees: 10%

Utility costs I will have to pay per month: $391

Using the bigger pockets calculator, I'm not exactly sure what to include there for vacancy rate, repairs/maintenance, and cap ex. I put 7% for these as an estimate because the property has a newer roof, new boilers, and does not have a septic system. It seems to be very well maintained and in really good condition. Any repairs I can see would be minor cosmetic. I think the vacancy rate is 7% but am not 100% sure.

Any help would be greatly appreciated. I'd like to put in an offer tonight but want to make sure the numbers all make sense. If I can raise the rents to $3900 total, using the bigger pockets calculator it looks like I'll get just under $1,000 net income after all expenses per month. I've heard that $250 profit per unit in Massachusetts is good, and I think I'm just about there after we raise rates and assume all the numbers I calculated for expenses are correct. Is this profit also good for the amount of money I'm considering putting down?

Thanks!

-Joe

[Ann Bellamy]

Joe, Fitchburg is usually considered to be Central MA, not Western MA, just letting you know when you speak to others.  Considering you are in Waltham, it probably feels to you like it's Western MA because to you, it is way out there.  :-)

It falls into the "Grown Men Cry" category.  Definitely become an expert on Fitchburg, it changes street by street.  Before you even consider buying in Fitchburg, educate yourself.  There is a group run by @Brian Lucier called NWCLA (Northern Worcester County Landlords Assn, and he is very knowledgeable about Fitchburg landlording.  Also Dave Fleckner knows that city well, as does Dan Botwinik.  You can usually connect with Dave at NewEnglandREIA.com, he's usually at the meetings.  the next one is this Wed.  Any one of the three will be found attending my Black Diamond event in Worcester, depending on topic.  That next meeting is 8/18.  

I don't even lend there, it's one of the towns I exclude, and 50K per door sounds like a lot of money for Fitchburg.