First post! Triplex in Sacramento, CA

[Aaron Hu]

Hi BPers!

I’ve been interested in Real Estate Investing for awhile and have read Rich Dad, Poor Dad + Loopholes of Real Estate and The book of Rental Property which brought me to BP. This is my first purchase so I’m hardly the expert.

I’ve got my offer approved and just got my pest, home and appraisal done. Here’s the deal:

https://www.zillow.com/homedetails/2313-Cantalier-St-Sacramento-CA-95815/26089509_zpid/

1920 built with 3 separate structures for 3 units. Decent curb appeal in a D neighborhood but the street the house is on is definitely nicer than the rest of the area. Front unit is 1035 sq ft, 2BR/2BA with attic converted to 2 small bedrooms for kids. Backyard has a unit which is 600 sq ft 1BR/1BA with kitchen, and a 400 sq ft studio without kitchen. Each of the back units has a separate yard and a separate entrance. Studio shares electricity with 2BR and studio and 1BR share a water heater. House had the interior repainted and recarpeted.

Listing Price: $290,000

Offer accepted at: $290,000 + $5k credit + $2,600 loan credit

ARV: Unknown

Holding cost: Unknown how long repairs will take.

3% closing cost - $7,600 credit = $1,100

Gross Income: $2,800 - 5% vacancy = $2,660

FHA @ 3.5% down ($10,150), 3.5% interest rate + $196 MIP = $1,429 PI+MIP.

Rehab (Dry rot removal, 2 piers in foundation need replacement and cracks in foundation, add kitchen to studio): $25,000 - I’m still not 100% sure of this cost.

Expenses: $280 (10% CapEx + Maintenance) + $302 for property tax + $260 (water, sewer, garbage) + $50 for pest control every other month + $100 house insurance = $992

Cash flow = $239/mo

Cash @ closing ($25k + $10,150 + $1,100) = $36,250

Cash on cash ROI = 7.91%

Your opinions are welcome about my first home purchase. Is this worth pursuing? Is my math correct? Is this property too much problems for too little gain?