Six months into my first investment property in Maine

[Mike Roy]

Hello - I'm six months into my first investment property, a 4-plex in Midcoast Maine, and thought I'd share the numbers based on the experience so far. There's so much talk about how high prices have gone and how hard it is to find a deal, but I think we did okay for our first go of it - and we found this one on the MLS!

Purchase Price: $180k

Current Gross Rents: $3,050 ($800, $800, $825, $625)

P&I: $674 (30-year fixed at 4.375% w/25% down)

Taxes: $392 (Worked with city to reduce from $445!)

Insurance: $123 ($1 Million liability, $5k deductible - SHOP AROUND!)

Management: $305

Common Electricity: $15

Heat: $0 (Converted to individual heating units)

Water: $125

Trash: $65

Lawn/Plow: $85

Vacancy: $250 (Approx. 8%)

Repairs/Cap Ex Reserve: $315 (Approx. 10%)

Monthly Cash Flow: $700 

Down Payment/Closing Costs: $46,000

Initial Repairs: $7,800 (Roof/Exterior Paint)

Heating System Conversion: $5,500 (From K1 to Individual Rinnai)

Total Cash Invested: $59,300

Cash on Cash Return: 14.17%

Going into this deal, Cash Flow on paper was only about $150/mo, but we made some very easy changes to increase that dramatically.  First, we increased rent on two units by $25 each, taking gross rent from $3,000 to $3,050.  Next, we worked with the city to reduce the building's assessed value, thereby reducing the tax bill by about $50/mo.  The previous owner had been paying heat for the building ($300/mo), so we switched this out to individual Rinnais and reduced this to $0 without any real push back from tenants.  Also, the previous owner had a Section 8 tenant and was paying their electric, which they abused ($150/mo!) - We have since replace that tenant with someone who can pay their own utilities.  Just like that, $150/mo Cash Flow became $700!  

Obviously, it remains to be seen if my vacancy and reserve estimates are on target, but I don't think I'll be too far off based on what I know about the market, the condition of the units and the decent quality of the tenants.  

I think we're off to a good start and we're excited about finding the next one.  I'm curious to hear from other investors in Maine/N.H. to see if you're finding similar (or hopefully better) deals.

Best,

Mike