Check My First Deal!

[Kendall Short]

Alright guys, I'm going to check this place out on Wednesday and most likely put an offer on it after that. I went to see it a few months ago, but thought I wasn't ready for such a "big" deal at the time. Currently waiting on my pre-approval letter. 

The deal is as follows:

Specs: Four units, two side-by-side duplexes. All units are 2x2 with a basement that can be utilized as an additional bedroom + a 1 car garage. I will occupy one of the units.

Asking: $310,000, on the market for over a year

Offer: $260,000 hoping to negotiate down to around $280,000 - $290,000. Ran the analysis at $290k with around $5000 closing costs and inspection fees, but plan on having the seller pay for CC if they don't budge on the price.

Would like to put 5% down, but lender asked for 10% for them to finance since my commission income last year isn't as pretty as this years. I ran the deal with 7.5% down on the BP calc.

FINANCIALS

Down Payment: 21,750

CC & Inspections: 5000

Cash Needed: 26,750

Monthly Expenses

P&I: 1453/mo

T:  208/mo

I: 115/mo

PMI: 175/mo

PM: 232 (I will attempt to self-manage for as long as possible)

Vacancy @ 5%: 116/mo

= $2299 monthly payment with PM, $2067 without PM in place.

I figure cap-ex and maintenance will happen, and we don't know when.. as something could happen day 4 of owning the property. So I will have cash reserves set for the property.

Current Rents

Unit 1*: 615 Unit 2: 775 Unit 3: 775 Unit 4: 600 (Will occupy this one)

= $2165 monthly rent

* I plan on upping this to 775 once in my possession, and eventually increasing all of them to 850 once it's turnover time. <-- any advice on increasing rents would be great. 

Future Rents

Once I move out and all of the units are rented 

Unit 1: 850 Unit 2: 850 Unit 3: 850 Unit 4: 850 

= $3400 monthly rent

Let me know if this sounds like a good first deal to you. I am always open to advice and constructive criticism. Thanks all. 

[Kendall Short]

Originally posted by @Robert Schumacher:

Kendall Short I would want to know if they are motivated to sell. Something tells me they are happy keeping it on the market, and waiting until an inexperienced investor makes an offer.

What are other similar 4-plex units selling for (sold comps) and I personally would be offering less to test the water. Remember ... we make our money on the purchase.

On a side note, my grandfather always said “All that matters is that YOU are satisfied with your purchase price.” If closing on this helps you get closer to achieving your goals, GO FOR IT !! Best of Luck

I do know that the husband passed away last year so she wanted to get rid of it. 

I’m going to initially offer $260,000 and hopefully not get ignored and cussed out haha. 

But yes, I just need a place to live as I’m currently living with my girlfriend and her parents, and I’d much rather have this deal that breaks even while I’m house hacking or paying me a couple hundred bucks per month than taking up space at their place. Rents can be raised and if I buy good, I think it could be a great long-term hold. Thank you, Robert.