QuadPlex Deal Review...

[Ben W.]

Hi all,

I am new and looking at buying my first investment property. I am looking at a quadplex built in 2017 in the downtown area of a city I know pretty well. 

Gross rents = $101k a year. 

Insurance = ~$1300 a yr.

Taxes = ~$12k a yr.

They are asking $1.3 million, I'd like to get them down to $1.1, but figure $1.2 is pretty likely.

Thoughts? 

From my end using the 50% rule I figure ~$45k cash flow after all the expenses and property management. Because it is pretty turnkey and new, there is not a lot of maintenance currently. I am looking it as ~4% return in cash flow on my investment after investments, plus some possible long-term appreciation given the growth of the city/area.  

[Aaron K.]

Especially for something this expensive I would highly recommend going beyond the 50% rule and breaking down costs more specifically.  Also with this being only 4 units and gross rents at 100k+ per year the 50% rule may be far less applicable; because no matter how much the rent is most maintenance will cost the same in a unit that rents for $800 or $2000 per month.  The 50% rule is a place to start to see if you should further evaluate the property I would not consider it a final analysis that someone should base decisions on.