Should I buy this triplex in Kearny?

[Henry L.]

Hello All:

My question is this: am I fooling myself by thinking that it's still a good deal even if the cash flow is -$212/month, and the Cash on Cash ROI is -3%, because I probably won't need the 10% property management fees? If I take out this 10%, I get $100 cash flow and 1.3% CoC ROI.

Details:

I'm looking at a 3 family home in Kearny, New Jersey.  I offered $270K, and was countered at $310K.  There are 2 other offers, and I was told that I need to offer at least >$300K.

So let's say I purchase it for $305K.  The gross rents are currently $3000, I believe I could at least get $3100.  It looks like there won't be much need of repair -- I estimate $5000 at most.

All the utilities are split out for the 3 units, except for water, which is $200/quarter.

If I estimate 10% Vacancy, 10% repairs and maintenance, 5% capital expenditures, and 10% property management fees (I will mange it myself), I get NOI $11,362, cashflow -$212, CoC return of -3%

I believe it's in a good location/neighborhood, one that I wouldn't mind living in, and it's close to Newark Airport.

I would really appreciate your thoughts.

[Russ Draper]

Your first paragraph says it all.  Why are you even considering this?  Just because the deal is near where you live?  Buy something out of state if you have to, but don't buy a bad deal!