My stomach is in knots on whether to put an offer in for the following property. I've been burned before so I'm extra cautious this time around. It's also in a city I know very little about (Norfolk, VA) here are the numbers- I welcome your thoughts/ insights:
$259k - sales Price (4- unit building fully occupied)
$1460- total mortgage payment (after 25%) down
$305- Property Management Feee (10%)
$105- trash (total water is $315 p/m but seller bills water to tenants and has it written in the lease)
$60 - lawn care
Total rents are $3050
Owner says monthly expenses are low.
The best case scenario is net income of $737 assuming $400 extra monthly expenses (for worse case scenario unexpected expenses which always come up) and assuming all the tenants pay their rent.
Positives-
- Seems to be a good cash flow if expenses are kept low and everybody pays
- 4-plex is located in an 85% residential area
- building is ok condition (built in late 70’s) except roof is 18 yrs old
- all tenants are gainfully employed
Concerns
- while the neighborhood visually looked fine, according to crimemapping.com its a moderately high crime area. When I called the local police dept to verify all they would tell me was it was medium crime area
-owner put it on the market 3 times in the last 3 years and took it off. Now it's a FSBO. Did he take it off because he couldn't sell it? If not why not? Am I missing something?
- have to rely solely on a PM given I am not local. (I’m 4 hrs away). Need to find a PM in the area willing to go the extra mile and physically read the water meter each month so the water can be charged back to the tenants. Given the high water bills this is a must.
Based on the above, what do you think? Am I missing something???
