4-plex Calc Analysis - This can't be right... is it?

[Derek Meehan]

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*This link comes directly from our calculators, based on information input by the member who posted.

My capital expenditures seems quite a bit low. I did a calculation and ended up coming up with something like $600/mo which seems quite a bit high, so I lowered it to 6% just because there is no way my math was right on that. Even after lowering the capex it seems like this property is just not fit for a rental with my low down payment. Am I missing something in my calculations? From what I'm gathering, this 4-plex would only make sense at around $300k. Is it true that it is overpriced $150k? Or am I just being a total newb in some area? :) Thank you BP for your amazing knowledge and willingness to pour into other people's life!

[Derek Sperzel]

It appears to me that you are being excessively conservative in your time periods per capital expense. I am all for erring on the conservative side regarding REI, but it looks like you've killed your deal on paper. For example:

ROOF - Asphalt shingles should last 20-25 years.

HVAC - I usually plan for a lifespan of 15-20 years, but your dollar amount looks accurate. I usually pay $4k for all new HVAC on my SFR.

PLUMBING - $12,000 seems quite high to me. I would need more info regarding the property, but you likely wouldn't need that much saved up for plumbing unless you anticipate complete failure of that system.

STRUCTURE - If you think you need to invest that much in foundation and structure, you may want to rethink purchasing this property.

I would recommend you speak with some local contractors to dial in your expected costs, and life expectancies of the respective home systems.  Best of luck!