4Plex Eval

[John A]

Here are the details:

4plex
Currently no tenants
Foreclosed
Asking $99,800
Offering $100,121.00
Potential Rent $400/unit
Closing Costs incl Downpayment $30,450.98
Loan Amount $75,090.75
APR 5.446%
Mortgage $581.40
Gross Monthly Rent $1600
50% Rule $800
Monthly Cash flow $218.60
Annual Cash Flow $2640.00

Good Deal? Bad Deal? Looks good to me. My first time so, I'm making sure its not too good to be true by checking with seasoned veterans.

I've yet to see the property but from the pictures it looks like its going to need some work. Not sure how much yet. Will see property next week.

Thanks!

John

[Mehran K.]

When using the 50% rule, you subtract just the mortgage alone (Principal + Interest) because the taxes and insurance are lumped into the 50%.

With that said, be sure to figure out exactly what the property tax bill will be after your purchase. Also, get a real insurance quote on the property.

$1600 x 50% = $800 - $434 = $366/mo cashflow = $91.50/door
Many people shoot for $100/door, but for California that is great!.

Are all units INDIVIDUALLY metered for all utilities? If not you're going to have to adjust the numbers. because if your even paying water it will shoot up closer to 60% expenses.