All Forum Posts by: Michael Wentzel

@Brandon Mendoza I have looked through all of the multi-families on the MLS and walked through about 8 with my Realtor. The ROI on this particular property is significantly better than others in the area. I have found similar cap rates and roi on single families and that will probably be my next purchase. What numbers do you look for on ROI? What market are you in?

Thanks for all of the input.

@Ian C. The seller is covering $1700 towards closing costs. The total amount I need to bring to closing is about $23,000 and I factored that into my ROI. Where are you finding properties for $20,000 per unit?

So we've held two single-family homes as rentals for the last few years. We recently sold one and we're looking to purchase our first multi-family, a 4-plex.

Here are the numbers....

Purchase price- $85,000

Financing- $21250 down (25%), $63750 at 5.25%, fixed for 30 years

Monthly rents- $1950

Monthly expenses- $1248

Tax- $31

Insurance- $55

Management- $195

Vacancy- $100

Maintenance- $195

Mortgage- $352

Utilities- $320

Monthly cash flow- $702

Cap Rate- $12648/ $85000 = 14.8%

ROI- $8424/ $23412 = 36%

Rent over Purchase price= 2.3%

So in my inexperienced opinion, the numbers look great. The property has been well-maintained by the landlord. It currently has three units occupied. The property was owned by an elderly lady who passed away. It passed to her son who is also elderly and doesn't want the "hassle" of a rental property.

We are investing with a buy-and-hold strategy to eventually replace our income. So the most crucial numbers to us are the monthly cash flow and the ROI.

The market is Pueblo, Colorado. It doesn't hold much possibility for appreciation, but it is a stable community of about 100,000 people known for its low-cost of living.

Please feel free to share insights, concerns and/or feedback.

Mike