Closed on first multi-family today - best purchase to date

[Jeremy Hart]

After years of having rentals that just weren't doing much of anything, in a market that was getting progressively tighter, I started looking in an adjacent market thanks to the suggestion of another investor in that particular city. Narrowed it down to 6 blocks of what I felt was an up and coming area on the cusp of revitalizing, and found four or five places to look at. Ran numbers on three, and just closed on our first duplex today. Here are the numbers:

• two 2 bed/2.5 bath units, built in 2015
• Purchase price: $231500, no repairs
• Equity position: 25%
• Financing: Conventional 30, 4.875%
• Monthly income: $2275
• Monthly Expenses: $1406
• Monthly Cash Flow: $869
• Cash-on-Cash: 12.71%

Our numbers are a little skewed because we're establishing a Cap X and Reserve account up front rather than collecting for them each month, but we're doing that because the units are so new and in such good condition. We're buying this one at a premium, but didn't have the funds to buy three (which is what we'd have had to buy in order to get the same return as this one). With reserves in the bank we should be able to pretty quickly build up to some smaller cash flowing properties, with the goal being one more in the second half of the year.

It's not a screaming deal like some, but it needs nothing and starts paying us from day one. We're happy with that!