Found the Right Property, Wrong Price

[Scott E.]

Hi

I'm hoping the pro's can help me to analyze this potential deal. I've been looking to invest in my first multi-family property for ~6 months now. The Phoenix market really seems to have dried up, but I still often find deals worth running the numbers on. The problem usually ends up being that the deals where the number work are located in war zones.

So here I am today. I finally found a great property in a great area. It is completely renovated, "turnkey" and fully occupied, which I think would be a nice touch for my first step into the multi-family world.

The problem lies in the numbers. I've run the 50% rule and the 2% rule and they just seem to be asking too much. My question is, what is a fair offer price for this property? Details to follow...

Asking Price: $275,000

Property Type: Multi Unit (4Plex)

Unit Mix: One 2br 1bth, Three 1br 1bth

Gross Monthly Rents: $2,200

Monthly Expenses:

$1,388 PITI ($1,052 annual taxes, $1,200 annual insurance)

$220 Property Management (Using 10%)

$200 Water/Sewer/Trash

$0 Landscape (Desert Lanscape, I can handle myself)

Total Monthly Expenses: $1,908

Monthly Cashflow: $292

I realize that I should be factoring in an additional 10% for repairs, and another 10% for vacancies. This ultimately eats up all cash flow.

My numbers are figured using conventional financing with a 20% down payment. Please help in determining a fair asking price for this complex, and also if there is anything that I may have missed in my analysis. This community is amazing! I've much more of a lurker than a poster, but I'm finally feeling prepared to get my feet wet and just need a little assistance.

Thank you ahead of time for your help.

-Scott