First Deal Analysis Tips

[Yohannes Kifle]

Hey BP

I'm thinking of making my first offer on a triplex and I was hoping to get a quick sanity check and some advise about an interesting aspect of this property. I'll start with that.

One of the tenants is a convenience store on the first floor. The other unit on the first floor is a small office. Then the third unit on the second floor is a normal apartment. Currently the convenience store's rent includes utilities which I'm assuming means I'll be stuck with potentially very high utility bills depending on how they run the store. So does anyone have advice on how to estimate the utility costs of a store? Maybe I should just call the utility companies and see if they can tell me how much is paid for that property. I'm not sure if that is something they can freely give out. And are there any gotchas to having a store as a tenant that I'm not aware off? So far all my research has been about managing residential tenants.

Anyway here are the numbers.

Asking price: $389,000.00

Monthly P&I: $1,435.23 (assuming I paid full asking price with the type of loan I can get)

Income

Monthly Rent: $3,490

Expenses

Closing Costs: $3000

Renovation Cost: $0

Annual Property Taxes: $4,787.62

Annual Insurance: $1,800.00

Monthly Utilities: $300.00 (this is just a guess though)

Monthly Vacancy: $100.00

Monthly Cap Ex: $70.00

Monthly Repairs: $104.70

Monthly Property Management: $314.10

Total Monthly Expenses: $1,437

Monthly Cash Flow: $617.00

I'm looking for a cashflow of $200 per unit. So if these numbers are correct this meets my requirement. And I see opportunity in the future to split one of the units into two too increase the total rent I can get.

What do you all think? Is this a deal or am I being to optimistic?

[Patrick Liska]

 with your numbers, the cash flow is correct. i'm assuming there is no lawn to maintain ? if the other units have the utilities separated out, whats left is the convenience store. you could ask the current owner how much the utilities usually run for them and if they can show you a bill, then in your lease agreement ( which you can change btw as new owner) if you want to include the utilities, set a limit on how much you will include and anything over they have to pay for.