Looking at a Fourplex

[Brad Gibson]

Im currently looking at a Fourplex in West Texas.

Unit 1 -- 3 BR 2 BA

Unit 2 -- 2 BR 2 BA

Unit 3 -- 3 BR 2 BA

Unit 4 -- 2 BR 2 BA

All four units are rented at $625, $525, $625, $525.  Total monthly income is $2300.  It has a new roof.

List price is $114,000.  I would say the property is a "C" or "D".  Tenants pay all utilities.  The area/neighborhood are not in the growth path of the city, so appreciation will likely lag.  This is a pure cash flow play.

Here's what I'm looking at 90% occupancy rate.  

$2,760 per year in management

$200 in accounting and legal

$3600 per year in repairs/capex

$1200 in insurance

$2,667 in taxes

$5,508 in debt service after 20% down

From those numbers, it looks like it might cash flow over $10k per year which would be a really nice return on equity.

Any thoughts for a newbie? I don't know how insurance treats duplexes and/or if the financing will be different than a SFR. I already have a $1 million umbrella policy.

Thanks in advance.