2x 4 plex deal. Numbers look good but...

[Jeremy Freeman]

Hi everyone, I am around the Tulsa nw Arkansas area. I work full-time. I have one in the rental property that used to be my primary residence

. That property is in the process of being sold, The cash flow is under $100 a month on the single-family which isn't worth it for me.

I am looking at 4 Plexes for sale eight units in total.

The price is $200,000 each so a total of $400,000 for the acquisition. At 20% down plus closing I would be into the property is roughly $100,000

The properties were built in 2006. and each unit rents for $600 a month. Property taxes are $1100 a year flood insurance is $900 a year.

Downfall is it is not a metro Plex it is more of a rural community. I am not looking to sell the property I am looking to build a new portfolio of multi family that can take over my job someday.

does the deal seem to be a solid starting point for a portfolio?

What do you see in the numbers?

Anyway I could creatively finance to be lower then 20% down, I'd like to buy more properties fast as possible

[Andrew Johnson]

@Jeremy Freeman Just some quick math:

Gross Rents:  $57.6K

50% rule leaves: $28.8K for profit and debt service

$2,200 (your debt service number) * 12 months = $26.4K

Profit:  $2,400 per year, $200 per month, or $25 per unit per month

That's a really REALLY sloppy way of doing it.  But unless there's an a actual trailing 12 with real numbers you end up with a sloppy result.  Odds are you're also paying water (it's hard to get those metered separately with a 5th meter of the lawn) and *might* be paying for trash or at least a dumpster fee.  Just offhand I'd say that your $50/unit/month maintenance cost might be low.  You're hitting 11 years of property life so you'd expect appliances, HVACs, etc. to start needing repairs (which would hit maintenance) or maybe those appliances are at the end of their lives (which would hit cap-ex).  You'll also have to pay for lawn care, pest control, etc.  All of that "stuff" ends up at more than $50/month/unit.  You'll have some great money and some lousy months.  It tends to balance out.

Side note, you also had $1,100 for taxes in your first post and now it's $2,500.

I know this isn't a great answer but I hope it helps.