All Forum Posts by: Brian Black

Same questions. Thank you for asking. 

I am thinking of purchasing a 25 unit group of mixed properties in one town. 2 small mobiles, 1 SFH, multiple duplexes, 1 quad, 1 8-plex. Total 18599 sq foot. Purchase price $1,000,000. Repair and closing cost estimate $400,000. Down pmt 20%. Interest rate 5.15% with no PMI or lender points/fees. Total monthly rent currently 16,000 and with improvements/rennovations expected to be 20,000+. I assumed a 7% vacancy rate, 7% cap ex, and 10% to property mgt (as each place will be "fully updated" to a B or better standard most in B locations). P&I will be expected to be $10,500. Utility/Lawn expenses are about $2000 per month. Local PM is excellent.

Using calculators I find I will be bringing in just shy of $200 per door per month with an approximate 5% COC ROI and a purchase cap rate of 15.5%. The final purchase cost per Sq foot will be about $75.

I plan to purchase and then refinance once everything is fixed up and rented. 

What are the good and bad of the deal?

What options would others consider instead? What type of investments have you done in small multi-space?

Given the above, does this seem like a reasonable long term buy and hold investment?

What options would others consider instead?

If I had to hold 1 year of 401K/IRA investments to make it happen would it be worth it?

I would question those historic returns listed above.

This graph found today from the google machine:

I would express caution in expectations of a stock return of 40%-70% with any strategy. One that could reach those highs could have significant risk of downside. It might be fun while you are "winning", but a 5 year outlook might be unrealistic as well as fail to consider a loss.

Additionally, if you can significantly outpace the rental market (15% for argument sake) and are comfortable with a (high risk?) stock strategy that will last then next 5 years and make at least 40%, then why not just sell your properties and put all the money in the stocks?