Quick Deal Opinion and Thoughts

[Andrew Christian]

I know I'm giving some rough numbers here but wanted to get some opinions on if this deal is worth it or a good deal (generally) numbers-wise:

Purchase Price: $529,000

Down Payment: 25% = 132,250

2 Units: 4 bed/3 bath and 2 and 3 bed/2 bath

Current rents: 4 bed = 2,100, 3 bed = 1,700 for total of $3,800 rented and under lease for a year. Rents are below market pro forma has rents at $100-200 more per unit.

Mortgage, taxes, insurance, and other costs roughly $3000/month

Self managed. 

I know that's bare bones but I just wanted initial thoughts. Thanks.

[Satyam Mistry]

@Andrew Christian Hello Andrew, considering $4000 gross rents with the numbers you have outlined there is about $20 monthly cash flow. This is considering 8% vacancy, 5% maintenance, 5% Capex, and 10% PM. Good to have the numbers in there especially on a multi family just in case you outsource PM. If you self manage the cash flow changes to $420 monthly, but cash on cash is still under 4%. This is considering 25% down on a 30 year amortization at 4% interest rate. What are the property taxes and insurance quote you are receiving? I had to input about $8000 annual property taxes and $200 monthly insurance to get close to your $3000 monthly expense with mortgage payment. Is this a newer construction or in an area that is more appreciation based than cash flow? I am assuming at this price point you are in an A/B+ type neighborhood. Based on these numbers and the amount of capital entering into this deal I would pass.