Closed on a $1,446,000 fourplex with 3.5% down via FHA / 203k!

[Tom Wagner]

Location: Jersey City, NJ

Property Type: Fourplex gut renovation, financed with a 203k loan

Purchase price: $999,000

Renovation amount: $460,000

ARV: $1,500,000

Projected rental income: $10k/mo

Annual income: $120,000

Net Operating Income: $69,500 (5% vacancy / CapEx / R&M, 10% property management)

Unlevered Yield on Cost: 4.63%

Annual Cash Flow: (12,028)

I'll be in the red from a cash flow perspective early, but I am still super stoked about the deal. 20 minutes from Manhattan in Downtown Jersey City, a rapidly appreciating part of the city that feels similar to Brooklyn.

Really trying to take advantage of the FHA loan by levering up to a $1.45mm loan (which is within $30k of max loan amount). Debt paydown will be $33k+ in year one and any appreciation on a $1.5mm base is big $$$.

More detail can be found in my Twitter thread on the deal:

https://twitter.com/twbuilds/status/1332807426056335366?s=20

[Mike Dymski]

Congrats.  If you normalized the cash flow for a standard down payment and rent from the unit that you will occupy, it would look even better.

Why buy and take on the hassle and the risk of a half million dollar renovation project when the ARV is equal to the cost of the property and rehab? Why not just buy a renovated property for $1.5 million?