4 PLEX, in NY. First Deal, Gotta Move Quick!

[Daniel Kim]

Hi Everyone,

I currently found an off market 4-plex in yonkers. 

Pro's- literally 5 minute walk from the ludlow station, turn key(no renovation needed/owner was a contractor), extremely friendly tenants(spanish), safe feeling, clean neighborhood, coin operated laundry that 3 buildings use, potential for upside by increasing rents 3-5%, potential for appreciation if the area get's developed and gentrified(longer play)close to st peters catholic church & Pearls Hawthorne School. Heavy management not needed.

Cons: all tenants are on a month to month, Expenses seem low, currently in a low income area(could be a pro, seems like hard working class), don't know if this area can command a higher rent increase.

Price:$675,000

Taxes:$7900

Water bill: $3000 (Seems Low)

Electricity:$3000 (Seems low)

Insurance:$1100

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$15,000 (NOI)

Annual Rent Roll
$1250-   Basement(1 Bed-skeptical Price, but I haven't experienced yonkers 100% yet)

$2000-   1st Floor (3 Bedroom-Supers unit)-Super doesn't pay for electricity

$1650-   2nd Floor (3 bed-said they're raising it to $2000 within the month)

$950-     3rd Floor(2 bed-said they're raising to $1150 in a month)

_______________________
$5850- Monthly Rent Roll
$72,000- Annual Rent Roll

The Plan

$135,000(20% down payment)

$540,000 (Left Balance)//$30,936 (annual on a 4% interest)

-------------------------

$72,000 (Annual rent)

-45,936(NOE+Mortgage)
__________________________

$24,264 (Cash Flow-17.9% Return) 

Questions:
What are your thoughts on this deal?
Any yonkers investors know if the units can command such rents stated above or is the owner fluffing the numbers?
ANY COMMENTS WOULD BE APPRECIATED! :)

[Samuel Bavido]

Yea, you definitely want to run the numbers again with CapEx, vacancy and maintenance. Once you've run those numbers again, if the deal doesn't make sense, adjust the price down until the numbers do work for you. Now you know what your maximum offer should be.

Oh, and don't forget closing costs!