All Forum Posts by: Account Closed

I'm curious how you decided on which hotel franchise/brand to use. Can you give us some insight?

@Cody McGuffie I applaud you for putting in the time, work and effort by contacting many people & even flying out there to see if you could make it happen. Sounds like you made the right call. Keep looking elsewhere now that you have a better idea of your criteria (contact commercial brokerages with your criteria and be ready to close fast when they send a deal that meets it your way). 

How much equity do you have in your 4plex & personal residence? You could use equity loans or lines of credit + cash as a down payment.

An additional note, if there's 100% occupancy, that means you should definitely raise the rents when signing new leases.. What's the average rent price in the area? I'd instinctively add $25-50 a month to the new leases. Be sure to find out how existing expenses could be lowered (change insurance providers, replace water faucets/toilets/lights, add solar panels). 

 Also, don't do less than 20% down. That would only increase your monthly payments. 

You said $545,000 is asking price. I'd offer 80-85% of that then meet somewhere in the middle, depending on what an inspection of the property shows you. Don't force this deal to work by giving him full asking price and only getting a 3% return. 

Purchase- $545,000

20% down payment- $109,000

80% seller carry (owner financed loan)- $436,000 

Income: 

9 units x $620 x 10 months (conservatively accounting for vacancy) = $55,800

Expenses (yearly):

Monthly principal & interest at 5%- $2,341 ($28,092 yearly)

Tax- $7600

Insurance- $1700

Trash- $960

Gas- $900

Water/sewer- $2400

Electric- $480

Management (whether you will self manage or get a PM, 10% of rents)- $5580

Cap Ex (8%)- $4464

Total expenses (could be higher) = $52,176

Yearly cash flow= $3,624 / 12 months = $302 a month

$3,624/$109,000 = 3.32% return

Did I miss anything?

There may be potential with lowered expenses & increased income...

You should seriously get that purchase price down if you want this deal to work. 

Following. Currently in Korea.

This is why I will only ever buy multi-family, never SFH. Plus, I'd recommend keeping $10,000+ (or 6-9 months of payments) in reserves per property.

Following.