4 Plex Property Scenerio

[Chase Swanson]

I’m looking at a property to be our first one. It’s a four plex in what my agent says is a c area. I feel like I am running these numbers very conservatively but wanted to see what people think about the numbers below

215k purchase price

15% down

1436 piti

2400 rent (>1%)

5 vacancy

10 pm

5000 year reserves

2800 year maint

I’m very close to positive cash flow on this but I wanted to see if this is just a deal that needs some massaging or if there is a flaw in the way it’s calculated.

Any input is greatly appreciated.

[Jaysen Medhurst]

@Chase Swanson, first off, always present all of your numbers as either monthly or annual. Mixing them up makes it hard to follow and mistakes more likely. 

What are you designating as "reserves?" Is that CapEx? Do you plan to house-hack? If not, you probably won't be able to get away with 15% down. If you do plan to house-hack, you should run the numbers both with you living there and after you move out.

For the record, here's what I use in my underwriting:

• Vacancy: 8%, varies locally
• CapEx & Repairs: 15% combined
• Management: 10%
• I always break out Taxes and Insurance from P&I. T&I will go up each year, P&I will stay steady (unless you have a variable rate).

I think you're missing/need to consider:

• Any initial repairs? There's always something!
• Lawn care and now removal, if applicable
• Water/sewer
• Other house utilities, like hallway lights
• Admin/professional costs, e.g. accountant, advertising

I think you'll be barely break even on this property.