Chicago 2-Unit plus Garden Unit Possible Purchase!

[Edouard Pierre]

Hello friends!

I have a building that I've had my eyes on. It's not in the MLS at the moment but the owner has a family member that is an agent and will put it on unless I make an offer they're willing to accept. If they market it on the MLS as a conventional sale it will be listed at $139,900. Comps do support that price to a certain extent but I believe $125,000 is market value (I'm a broker myself).

The area is developing very nicely and I already own another property in the area. This makes collecting rent easy and checking on both properties convenient. I wouldn't say I'd walk with my fiancé at night in the area but...

The idea is to finish the basement (studs and electric already in place) and rent it out for extra income. The 2 units has jump been rented with very good tenants that have gotten their background checks done and vetted. The current owner is on his way to becoming a Chicago Police Officer and wants to focus on that. 

Porch, electrical, plumbing, roof, tuck-pointing, bathrooms, carpet and mechanicals have all been professionally redone with permits. Below are the numbers:

Purchase Price: 120,000

Closing Costs: 2,400

Repair Costs: 10,000

After Repair Value: 140,000 ($10,000 repair costs going to finish basement to be rented)

Financing: 20% down - conventional - 30yr - 4.65 Interest Rate

Vacancy: 5% - $112.5/month

Repairs/Maintenance: 5% - $122.5/month

CapX: 3.5% - $85.75/month

Property Management: 0%

Insurance: $200

Other Expenses: $125 (Water & Electricity for common areas)

P&I: $495.01

AT THE END OF THE DAY NUMBERS:

Monthly Income: $2450

Monthly Expenses: $1428.09

Monthly Cashflow: $1021.91

Pro Forma Cap Rate: 13.75%                Purchase Cap Rate: 15.17% 

Cash on Cash ROI: 33.69%

THANK YOU!