First deal analysis - quad

[Brett Hayes]

Longtime lurker - finally thinking it may be time to pull the trigger.

Looking at getting a quadplex built in 1910 in a rural area with little to no appreciation potential.  Very high renters population and several stable employers so not overly worried about population loss in the next 5-10 years.

For sale for almost a year, the owner passed and his son lives out of state and wants nothing to do with it.  Listed 105k.

Rental income: 37,200

Vacancy: (4,650) 1.5months average

Real Estate Tax: (3,300) Appraised higher than planning to offer.

Property Insurance: (1,400) Not sure how accurate this is - this is just guesswork from online searching...

Repairs & Capex: (7,440) Using 20% since old house

Utilities: (6,300) Heating gas paid for by owner

Lawn/Snow: (600) Currently gives $50 a month off rent to one tenant

Handyman: (720) I'm 2 hours from the property - have a guy I trust who lives there I'll pay $30 an hour to for handling minor items.

Expense: 19,760

NOI: 12,790

I am thinking since it's an inherited owner, in an area with little appreciation and other investors, to offer in the neighborhood of 80?  That'd give me (3,954) in mortgage payments for cash flow of 8,836 - 736 monthly or 184 per unit.

Feels good from a high level, but this old of a home I expect extreme capex costs in the next handful of years (no replacements to roof or furnace).  Any questions I need to ask or additional things I should consider?  Thank you!

[Ron Todd]

When you make your 80k offer (or whatever it ends up being) I would tell the seller why you are offering at that price. If you explain that you are accounting for x, y, and z they might be more willing to negotiate vs going in with a low offer and no justification. I'm in a similar situation in negotiations over a quad (not nearly that kind of CF though), but in the end, if the numbers don't make sense, I'm on to the next deal.