4 plex in American Fork

[Sophie P.]

Hi Everyone,

I'm currently looking at a deal that could be our first deal ever - It's very exciting but of course I'm trying to keep emotions out of it as this is purely an investment property. We are looking at it as a buy-and-hold.

I think the numbers look good but I thought I'd run it by the BP community first. Any inout would be greatly appreciated.

New build 4 plex currently under construction in American Fork, UT. Set to be completed in the Summer of 2017.

The Following Info is according to the information from the Developer:

Purchase Info

Initial Market Price: $700,000

Purchase Price: $649,900

Initial Cash Invested: $187,475

Income Analysis

Net Operating Income Annually: $52,484

Cash Flow Annually: 22,847

Financial Metrics

Cap Rate (Purchase Price): 8.1%

Cash on Cash Return (year 1): 12.2%

Internal Rate of Return (year 10): 19.6%

Sale Price (Year 10): $896,059

Rental Income is forecast to be $1,400 per unit

Units are 3bed, 2 bath and a garage

Units are 1,600 Sqft

I feel that the seller is optimistic on some of the numbers so in my calculations I have increased expenses (CapEx budget, management Fee at 8%, Insurance, Utilities) and I have also increased the vacancy rate from 3 to 5.2%.

According to my calculations our Monthly Income works out to $5,600 and Expenses to $4,380.

Would love to hear your thoughts on this.

Thanks so much!

Soph