@Michael Rodriguez - Congrats on your first acquisition target and welcome to Rochester! I have been investing in Rochester and Buffalo since 2008. Couple things I wanted to point out regarding your monthly numbers:
- Your maintenance estimate seems a bit low. I realize you consider the units in great condition since much of it was recently redone, but don't forget the tenant factor. Given the neighborhood rating you provided, you may not always get the best class of tenant that will take care of the units. Keep in mind, if you take on any RHA or DSS tenants, you will absolutely have higher maintenance costs.
- Property Management Fees are usually 8-12% of rents. So unless you are self managing or have a nice connection who is giving you a break, the $150 seems low to me.
- Water is tricky because tenants in multifamily units tend to be inefficient with the use of water. And it's hard for an owner to control that or even know which tenant might be the culprit. In my experience with my four families properties, the bill each quarter is between $150-$225.
- I would suggest if possible, you keep the tenants on a month to month to gauge their performance before you commit long term even though the treatment center is paying the rent. You just don't know the type of tenant you might get and it may make sense to have flexibility on when you can ask them to leave.
- When you calculate taxes, make sure you account for the change in assessed value which would impact your Monroe and City tax bill. You can usually call the city and get an estimate on how much your taxes would change based on the purchase price since Rochester claims to assess at market value.
- You should also consider a vacancy rate in your analysis - usually 10%. Keep in mind, even with the rehabilitation facility as a source of tenants, you'll need time in between tenants to make rent ready which means you aren't getting paid.
Overall from a cash on cash perspective, it seems like a good deal with room for the unexpected.
Good luck and congrats again!
PS - 5% on an investment property is a good deal.
PSS - You mentioned having a goal of 8 properties with 4 in your name and 4 in your fiancee's name. Keep in mind that once you get married some banks view you two as one and may limit your combined holdings. Consider putting a few in an LLC once they season. That way you can continue to buy in your name.
