My First Seller Financing Deal - Help!!

[Brandon Duff]

Hello Everyone!

I currently own 2 investment properties that are SFH.

I am looking at buying a 4plex and the numbers are as followed based on what my Realtor said. It is a gated community with a playground and pool. 

HOA is $6180 a year ( It covers insurance, water, sewer, a guard post)

Repairs/Maintenance is $500 a year

Property tax is $1527 a year.

Current rents are $650 for each 2bedroom 1 bath. Each property has washer/dryer hook up. 

Rentometer.com says that a 2 bedroom should go for around $717 a month on average with a median at $747. 

its 100% fiananced ( however I could money down) at 30 years. 5.5% interest rate. 

Asking price is $300k but my realtor says I should make an offer of $250,000 I am wondering if I should make an offer of $230,000. 

After 2 years I would have to refianace out  or it turns into a balloon payment ( balance remaining at target date)

based on the 50% rule

$2600 monthly income

- $1300.00 50% for expenses 

-$1,193.91 for monthly payment

$106 cash flow

With using the Calculator 

Income: $2600

-$130 5% Vacancy 

 -$130%5 Cap Exe

0% self management 

-$52 2% Maintenance ( based on what the pro-forma says) 

-$500 HOA

-$127.25 Property Tax

-$1,193.91 for monthly payment

$466.84 Monthly Cash Flow

[Christopher Brainard]

@Brandon Duff

Be careful with these properties - most of the fourplexes in Las Vegas are in D Neighborhoods and your Vacancy and Tenant Trouble Costs will be through the roof. Based on your rent rates, I'm assuming this is one of those properties. I also think your calculated costs are way too low, 2% maintenance is a pipe dream, you should always pay yourself a PM fee, Capex (unless its new) will exceed 5%. I also suggest you budget at least 8.3%, or one month, for non commercial units.

-Christopher