Evaluation Of A 4 Plex

[Adrian Williams]

A friend of mine told me about this 4 Plex in Olathe, Kansas/Johnson County thats for sale I was trying to get some help evaluating the deal the owner is willing to owner finance as well,

Four Units
Sales Price: $189,000
Tenant Pays All Utilities
All units are currently rented at $550 per month
Building is all electric
No HOA dues
Newer Roof, Updates Inside & Out

I'm in the process of getting more info just looking to see what others think about this deal !

Thanks :D

[Marc Freislinger]

Just say no!

In that rent range, the 2% rule will be your best friend. I personally wouldn't pay more than $80k for that property, but those deals are available in Indy.

Here's your problem:
Gross Rents = 2200
Expenses (50%) = 1100
Leaving you 1100 for your profit and financing.

A loan on $189,000 at 8% (being nice) is 1386.82. Leaving you negative 286.82 each month.

Now, you'll have everyone come in and tell you to ignore the 50% rule, but that's up to you.