All Forum Posts by: Anthony King

Great advice everyone. Pretty much what I expected, but I hear a lot of people say min 8% CoC ROI, 1% rule, etc, and at current rent rates the CoC ROI is a measly 2.9% with a cash flow of $197/month. With all units at market rents it's $598/month cash flow and 8.78% CoC ROI.

For the calculation I use 7% vacancy, 10% maint, 10% PM (will be using a PM), 5% CapEx, actual utilities (owner pays sewer, garbage, lawn/snow), actual insurance quote, stated taxes, actual mortgage payment.

Do the number need to meet my standards day 1 or can I get there over the next year or two and it still make sense to do this deal?

All tenants are month to month.

I am under contract on a fourplex in North Canton, Ohio. Very nice area and the landlord has owned for 20 years and retiring. One tenant has been there since 1994, is 87 years old, and pays well below market rent. Rent should be $300 higher. The other 3 tenants have all been there at least 2 years and could be $75-$125 higher. I run the numbers at market rent and it would cash flow nicely, but unsure how to get to that point. Is it even worth it to start out barely breaking even? I'm assuming the 87 yr old tenant couldn't afford even a $100 increase if she's on a fixed income. Looking for advice.

Who are the lenders that will do 15-20%?

Quick take - this does not look like a good deal. Did you factor in 10% Vacancy? 10% Maintenance? 5-10% CAPEX? 10% Property Management whether you intend to use it or not? Minimum 50% expenses?

For comparison - I am purchasing a fourplex for 220k, gross rents 2750/month. Taxes are less than half yours, tenants pay all utilities and my expenses are still 50%. I just don't see a 360k property with 3000/month rents and 6800 taxes cash flowing, and that's not even including all of the assumptions you likely didn't factor in.