First time buyer - Multi-family analysis - Fox Valley, WI

[Ben Ertl]

Hi everyone, my name is Ben. First time buyer here.  Hopefully this post makes some sense..

Stuff about me:

I'm about 75% finished with the BiggerPocket's "The Book On Rental Property Investing" (that blue book) and have listened/read quite a few of the resources on this site. I currently live in an apartment in Appleton, WI paying $720 rent + $42 internet + 40 utilities per month ($802 total/month).  

Working from home I make about $70k / year.  Rather relaxed work schedule, about 30-40 hours per week spent on the computer/phone.

I have about $15,000 ready for a down-payment with more I could add each month ($2k if necessary per month).  My girlfriend lives in Green Bay and because her parents wouldn't approve of us moving in together (until married), we are pretending to be rebels by having her be a tenant in a duplex/triplex that I purchase.  I would be living under the same roof, different unit.

Property numbers that I've thought about:

• Listed price: $79,000
• 3 units (currently renting at $425, $450, landlord/$0) - month-to-month
• Right across from school, in a Class C neighborhood, street on nicely kept residential with regular police presence, but sketchy loan places within 5 minutes and crime map is full of "disorders".
• House built mid-1800s
• Monthly Expenses
  1. Tax -- $138.75
  2. Insurance -- $62.50
  3. Utilities --$60.00 (split with girlfriend)
  4. HOA -- $0
  5. Vacancy -- $60.00 (5% of the time or unless I really mess up Valentine's Day)
  6. Repairs (cleaning) -- $100.00
  7. CapEx (replacements) -- $100.00
  8. Prop. Mgt -- $120.00
  9. Mortage $340
• Closing Costs - $5000
• Rehab (walking through in 5 days) -- $5000
• Down payment -- $15,8000
• Total Investment = $25,800
• Cash-on-Cash ROI = 10.21%

Notes:

I'm sure there will be rehab required, that's the biggest unknown right now.  I'm hoping to buy the place closer to $69,000-$72,000 depending on rehab requirements and neighborhood not being great.  I'm accounting for $1200/month in rent when we decide to move out a year or two later.

Thanks in advance, I'm sure I'm missing tons of stuff but I'd appreciate any feedback or comments.

[Andrew Kerr]

@Ben Ertl - the numbers look ok, but the bigger issue I see is the "C" class area. I lived in some rough areas when I was single, and did so because I was single. While you might be comfortable living in this area, will your significant other? Will her parents approve? Also, are you ready to manage "C" class tenants? It takes a lot of work.

Anyways, just some food for thought.