All Forum Posts by: Chris C.

Hi all,
I am still looking to make my first purchase, and this is a fourplex I am seriously considering. I would like some input on the numbers. The city I am investing in is a "depressed market", meaning no jobs are coming in and people are leaving. No signs of turning around anytime soon. There are a couple of abandoned fourplexes in the neighborhood. Neighborhood is average quality, but property values have declined 5% a year, for last six years.

These are my initial numbers:

4 one-bedroom apts.

Asking price: 75000 (haven't made my own lower offer yet)

gross - 2500 monthly

- 50% expenses= 1250 NOI
- mortgage 400-500= 750-850 cash flow

I have potential owner financing at 6% 5 year balloon, down paymt to be determined. I'm going to offer 5 or 10%.

The property does have some soft spots in floors that will need to be addressed as well.

Depending upon the financing, cash flow should average around 200 per unit.

Is this good in a declining (speculative?) market?

Thanks

Chris

Thanks for the feedback.
The area has been experiencing a population decline since the 60's. The last two years have been stable. I haven't found out why but with the city being a huge Navy town...government contracts being cut. The city does have enterprise zones but the neighborhood I am considering is not one of them. That being said, the property is priced about 15% below the Zillow market value- a hedge against further decline, for a couple of years anyway.
At this point, cash flow is more important than appreciation.

Thanks for all the great feedback.

Hello everyone,

I've yet to make my first deal and have been scoping out a couple of fourplexes in a neighboring city. The upside is the cash flow- about a thousand a month- on the properties but the downside is the area property values have been declining about 7% a year since 2006 and the market has showed no signs of turning. Should I buy in for the excellent cash flow and hope the market turns or pass on the area?

Thanks

Chris