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Updated about 8 years ago on . Most recent reply
A 4-plex and two Duplexes
I found a potential off-market deal, where a couple who recently retired has a 4-plex and two duplexes they're considering selling. They gave me an asking price for each, but they sound like they just pulled the numbers out of the air without doing much research. Based on comparable sales and discounting for potential repairs, I came up with what I think is a fair price. (I haven't been in the buildings yet). These are all in central New Jersey, less than a mile from each other, in a solid B market. The 4-plex and one duplex have asphalt shingle roofs which look like they're approaching the end of their useful life, so I've included enough capex to be able to replace them within 3 years of purchase. The second duplex has a slate roof and older siding (the other two have vinyl), so I've raised up the capex on that one a little more.
I'm hoping to get some opinions on these numbers. Personally I think the cashflow is great, but these three buildings would only be my second acquisition. I know higher ROI is always better, but should I be happy with 8% in a competitive B market? I need to find partern(s) to fund the down payments, so I'll have to split the cashflow. What is a standard split? I would be doing all the acquisition and management work, and would require at least 51% to maintain control over the partnership. I'm open to a "50/50" split, but should I be going for a split more in my favor?
| Property | 4-Plex | Duplex 1 | Duplex 2 | Total |
| Asking Price | $800,000.00 | $479,000.00 | $479,000.00 | $1,758,000.00 |
| Offer Price | $760,000.00 | $376,000.00 | $365,000.00 | $1,501,000.00 |
| Discount | 5.00% | 21.50% | 23.80% | 14.62% |
| Monthly Gross Income | $7,200.00 | $3,900.00 | $3,650.00 | $14,750.00 |
| Monthly Operating Expenses | $3,081.67 | $1,719.83 | $1,679.83 | $6,481.33 |
| Monthly NOI | $4,118.33 | $2,180.17 | $1,970.17 | $8,268.67 |
| Monthly Mortgage Payment | -$2,717.14 | -$1,346.42 | -$1,307.15 | -$5,370.71 |
| Monthly Cashflow | $1,401.20 | $833.75 | $663.01 | $2,897.96 |
| Annual Cashflow | $16,814.36 | $10,004.96 | $7,956.15 | $34,775.47 |
| Total Cash | $199,880.00 | $101,520.00 | $98,550.00 | $399,950.00 |
| Cash-on-Cash ROI | 8.41% | 9.86% | 8.07% | 8.69% |