Small Town 4 plex deal????

Question

Donovan Wilcox · Answer

@Mark Christensen

I pulled my offer yesterday. The current rent history is pretty bad.  I decided it was a bad investment. It’s back in the MLS if you wanna take a look.

Caleb Rigby · Answer

@Donovan Wilcox, your monthly cash flow is less than $85 per unit - for me, that isn't enough cash flow to make this a deal I'd consider. It seems like @Brandon Turner says he doesn't typically look at multi-family properties that don't cash flow at least $150-$200 per door. Good luck, but for me, this is too tight (especially for your first deal).

Take a look at some of the multi-families in Weber County - a lot closer to Herriman and better cash flow too.

Mark Christensen · Answer

PM me @Donovan Wilcox I have a duplex in Castle Dale and I live in Willard Utah.... I to does work.. :-)

Donovan Wilcox · Answer

@Eric Gardiner that’s exactly why I decided to post this up as it’s my first deal as a real estate investor and I’m feeling like I am being bullied by the listing agent. I am using the listing agent thinking that helps him make a bit more money on the deal. On the flip side he has done little to nothing for me and I get these sob stories that the sellers are old and in bad health and so they need the money. At the last minute my offer got put as a backup due to a full price cash offer minutes before mine was submitted. And the fact it took 2 days to submit my offer was a joke. If my offer would have been submitted timely mine would have been accepted at 165,900 and the supposedly cash offer wouldn’t have come into play. So a 2 day delay and a mysterious cash offer forced me to raise my offer to 172,000.  Not to mention I had to push my close date to December 20th and they are almost forcing me to use there inspector and appraiser. It’s a joke and I will most likely pull out of the deal unless a miracle happens.

Eric Gardiner · Answer

@Donovan Wilcox  If they dont give you the rent roll for the last few years then I would be very skeptical. If you dont have an agent representing you and you are dealing with the sellers agent then they might not be looking out for your best interests. Any investor should had that stuff over if they are serious about selling. Once an offer has been accepted that information is part of the due diligence.

The income should at least be on the sellers schedule E.

Also, how are the self managing a property while living in California. Seems weird to me.

Donovan Wilcox · Answer

Thanks for the help and the info.  It is a 4 plex 2 up and 2 down.  The owner have had it 12 years and have not done much in renovations.  I cannot seem to get a financial history or rental history from the owners. They are an older couple from California that are self managing the property.  It’s getting to be a bit dicey on the deal for sure.  I seem to get the run around from the agent when I ask for info on the property.

John Leavelle · Answer

Howdy @Donovan Wilcox

Is this a 4-Plex?  How old is it?  What condition is it in?  Recently renovated?  The reason it looks good are the numbers you are using.  5% Vacancy is low .  I go with 8.34% (or one months income) to be conservative.  CapEx is also low.  Stay conservative with 10% until you get the property inspected to determine the condition and life expectancy of all major components and appliances.  Then you can develop a more accurate CapEx reserves requirement.  Are all utilities covered by tenants or are you responsible for some?  How about lawn care/snow removal?

Look at the Cash Flow based on the 50% rule.  That is a better first analysis until you can get actual numbers.

Sorry, I no nothing about the local area you are asking about.

Small Town 4 plex deal????

Most Popular Reply