4plex In MN Analysis

[Richard Appleby]

Hello Everyone!

I've been running numbers on properties for about a month and finally found a 4plex for sale by owner that seems to be a great deal in my area. I've called the city to verify utility costs and have the rent/tax numbers given by the owner. I go to see the property in 2 days. Does anyone see in my analysis any red flags? Obviously I will have to verify current rents and leases, but I am super excited about this possibility.

Thanks for your time and help!

With paying management:https://www.biggerpockets.com/...

With self Managing: https://www.biggerpockets.com/...

[James Hamling]

@Richard Appleby your expense's seem a bit light, and missing items like garbage, snow & lawn. Also, while vacancy may be running at 3% today, don't calculate on it, we are in a mega-awesome leasing market, never use best of the best for LT analysis, use median average, go 6%. 

As for cap-x and maint., condition of the property, age of mechanicals, roof age, asphalt age etc, that's what should determine your cap-x not some random guess %. In some cases, yes cap-x should be 24%, when you have 17yr heating system, old single pane windows, aged roof, aged carpets, 80's finishes, because all that stuff will be a heck of a pile of $ to replace. To find your cap-x you need to first complete a maintenance schedule, which lists each main component, est age on them, est life span of such, cost of replacement and than a multiplier to project future replacement cost at __yrs out. Take that cost, divide by years left from now to then, there's your cap-x, an accurate cap-x. 

This is one reason why it's best to start with a either a very new, or very cheap property for your 1st, so you can afford to survive the learning curve.