Here are the facts on the loan and the deal.
I am entering with an FHA financing, which allows me to put down 3.5%
I will be living in one of the units for 1 year, but I am using my calculations without that and using this is a 2nd year analysis.
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LOAN DETAILS
Loan Amount: $436,000
Interest: 4%
Monthly Principal & Interest: $2,086.01
Mortgage Insurance: $302
Taxes: $ 364.50
Insurance: $ 250
3.5% of $445,000: $15,575
Estimated Closing Costs: $26,714
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INCOME
Current Rents are under market value
Current Rents: Unit 1 $1100 (2/1)
Unit 2: $900 (1/1)
Unit 3: $900 (1/1)
Unit 4: $900 (1/1)
Total: $3,800
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FIXED EXPENSES
Electric: $0 (tenants pay)
Water: $100 (estimated, I am in inspection period now and I am getting firm numbers today)
PMI: $302
Taxes: $364.50
Insurance: $250
Lawn Care: $50
HOA: $0
Total Fixed: $1066.50
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VARIABLE EXPENSES
Vacancy Allowance: 5% ($190)
Repairs and Maintenance: 5% ($190)
Cap Ex: $0 (New Construction and New Roof)
Property Management: $0 ( I will self manage)
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Monthly Income:
$3,800.00 | Monthly Expenses:
$3,496.64 | Monthly Cashflow:
$303.36 | Pro Forma Cap Rate:
6.14% |
NOI:
$28,242.00 | Total Cash Needed:
$28,575.00 | Cash on Cash ROI:
12.74% | Purchase Cap Rate:
6.35%
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As you can see I Cash flow with the current rents: $303.36. Pretty terrible for a 4plex, but remember that I will be increasing the rent to the MARKET VALUE which is pretty standard of minimum $1000, for a 1/1 in MIAMI.
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PROJECTED CASHFLOW after INCREASING RENTS
Monthly Income:
$4,600.00 | Monthly Expenses:
$3,576.64 | Monthly Cashflow:
$1,023.36 | Pro Forma Cap Rate:
8.02% |
NOI:
$36,882.00 | Total Cash Needed:
$28,575.00 | Cash on Cash ROI:
42.98% | Purchase Cap Rate:
8.29% |
Total Cashflow after vacancy and repairs: $1,023.36
Now for me that makes it a much better deal, what do you all think ? Am I missing something in my analysis?
Thank you guys, I wouldn't be doing this if it wasn't for the support and bigger pockets community.
