First time triplex offer

[Tom Canterino]

Hi everyone, I was hoping to get another opinion on the below deal. It will be my first triplex purchase. In a really prime location in Rhode Island. On a country club, safe location, renovated 1st and second. Keep in mind there is NO other available multi families in the entire area. FHA RI First Time Homebuyers Program Offer price: $320k Seller Closing Credit: $5k RI Grant Program: $7500 (to be used for down payment) Balance of down payment: $3700 Out of pocket: about $5000 Monthly Mortgage payment: $2340 Monthly Rent (with me living in 3rd floor unit): 2000 but will be raised to around 2250. When I move out it will rent for a total of around $2850. Plus laundry coin op sales - and pet fees and deposits.

[Ben Wilkins]

@Tom Canterino - welcome to BP!

As a pure investment property, most people will shy away from the income of only $2850, since it is less than 1% of the purchase price.

General "rule of thumb" is that a rental property should have a monthly gross income of 1% or more of the purchase price.

Granted, this is technically not a commercial property that you are looking at (it is less than 5 units) - as such, it will most likely be priced based on comparable sales in the area. On Trulia / Zillow, are there recent sales that are similar to the building that you are purchasing? Is the price similar, or is this property over or under-priced compared to those other sales?

I generally stay away from coin op's, since they are just another capital expense waiting to happen. I also tend to prefer not to count on pet fees as an "increased rent", since that fee is usually saved up to pay for repairs after the pet leaves.

My first instinct on seeing your numbers: this isn't a great deal. That said, I'm basing it on very little information.

To help others help you, get the following:

Recent comparable sales in the area

Expenses for the property. Is it public water/sewer? Are the utilities split?

Taxes in the area

Your long-term plan