4 Unit Property - Deal or No Deal?

[Steve K.]

I'm just starting out. 

Is this an ok deal? If yes why? If no why? (Everyone evaluates differently)

4 Units - Section 8 (S8) Approved - 2 Unit with Section 8 tenants and 2 Regular tenants. All occupied.

On my Initial visit. Saw 2 Unit and couldn't get into other 2. Building didn't need work, in my analysis.

65 Year Old Building.

New Roof being installed

Expected Purchase Price 300 K

Number below don't include property value appreciation

Loan to Value			81.07%
Cashflow / Initial Investment (CoC)			0.79%
Cashflow / Assets			0.18%
CAP Rate			6.01%

TOTAL OPERATING EXPENSES	$15,610
NET OPERATING INCOME	$16,819
Less: Annual Debt Service	$(16,324)
CASH FLOW BEFORE TAXES	$495
Add Back:Principal Payments	$4,406
- Depreciation	$(617)
TAXABLE NET INCOME (LOSS)	$4,285
Monthly Income Per Unit Pre Tax	$10.32

Thank you

[Linda Weygant]

I think Samir doesn't understand the flow of your numbers.  I think you've done an excellent job of laying out cash flow and then calculating your actual taxable income.  

It's tough to say if this is truly an ok deal though.  You've obfuscated the actual income and expenses, so it's tough to know if you've allocated for any vacancy, what your capex and maintenance amounts are, etc.