Riverside Rental Property Analyzsis (Triplex)

[Peter Bui]

Looking at this property in Riverside and here is my analysis. 

8377 Cypress Av Riverside 92503

Lets say I purchase 400,000 

The actual rent on it right now is: 550 + 1100 + 750 = 2400

Expenses (monthly)

Repairs: 50

Taxes 366

Insurance: 100

CapEX: 100

Total Expenses: 616

Loan

20% down, 320000 loan

30years @ 4.3% 

Mortgage: 1139

Cashflow: 2400 - 1139 - 616 = 200 monthly Cashflow 

ROI: 2.61%

Just looking for some feedback on this calculation, it looks like it isn't that great of a deal since ROI is only 2.6% but it does cashflow, so it can't be too bad.

Thoughts? Would that be an acceptable ROI being in the Southern California with the market as it is.

Would you invest in this property if you could get a purchase price? 

(If you are going to pursue it, take me with you! Just want to learn the process)

Thanks in advance everyone! 

[Berroni Thomas]

just looked into this property I believe you may be able to purchase this particular property for less than $400,000 I pullled some info on this place property it appears to be off market , are you working with an agent ? 

[Rob Moran]

@Peter Bui I think you need to recheck your mortgage numbers and I would anticipate additional capex and repairs in this type of product and age of the triplex. Once you do that I think you'll find a different bottom line. 

[Peter Bui]

@Rob Moran Sorry that was a typo. Mortgage is actually around 1583 but cash flow still ends up being around 200. Hmm but if i were to add additional capex and repair rates then that would still change that. Thanks for the advice!!

[Rob Moran]

@Peter Bui Also, where are you able to get a 4.3% interest rate on an investment property? 

[Peter Bui]

Hi @Rob Moran Hmm, seems like that is where I would need help with. What is a normal interest rate for investment properties in Southern California? OR what would be a safe number to put down on my analysis? 4.87%?

Thanks! 

[Rob Moran]

@Peter Bui To be conservative I like to estimate about 1% higher than owner occupied rate. Others may have different thoughts. 

[Peter Bui]

Hey @Rob Moran that sounds reasonable and safe. I will adopt your method. Thanks for the advice! 

[Kristopher Gomez]

Peter Bui doesn’t sound like a deal to me, I think you should save your 80k and buy a off market property wholesale....from me🤣👍🏽 send me a Pm and I’ll put you on my list I get lots of off market wholesale deals coming my way. Ask Rob Moran 😉

[Curtis Rouse Jr]

@Peter Bui So I did a quick analysis on the deal through the financial model I built and this doesn't look like a good deal at all even with missing expenses that you can see from the below charts. The last two charts indicate the purchase price ($160k) that makes the most since, but again it looks like there are some expenses missing so I would be careful with this deal. I personally invest in apartement complexes and the problem with these smaller deals is the economy of scales and only having 3 units bringing in all your income and what if 1 of the 3 units happens to go vacant (trust me this will happen), then your cashflow could potentially be wiped out for the entire year. Not trying to discourage you from these type of deals, just want you to be mindful of the challenges you could face coming from my experience and the many investors I personally know.

Assumptions

Downpayment: 20%

Closing Costs: 3%

Amortization: 30 yrs

Int Rate: 4.3%

Materials: 8% (plug)

Maintenance: 8% (plug)

Capex: 10% (plug)

Makes sense: Purchase Price @ $160k

* I hope this helps and makes sense. This is a sample and part of the full analysis that I do when preparing executive summaries for raising private money, so if you need more detail than what's provided just let me know. Please let me know if I can be of any additional assistance or if you have another deal I can help you analyze! The BP community has tremendously helped ignite building my portfolio so I love giving back. Best of Luck!