All Forum Posts by: Randy Brockett

Thanks for the response, I am just trying to learn the numbers as those were pulled from the selling agent. I do not necessarily want to put that much down as that would be to much of my available capital at the moment. Just saving and trying to learn from more experienced investors.

Hello All,

Any advice for a first time investor. Any thoughts on a live in flip, small multifamily units or doing both. I will need a place of my own coming up in the near future. I am interested in owner occupied FHA because of the smaller down payment. I have to consider PMI going this route and I would like to consider all options. Here is a 4 unit complex in downtown Hemet which advertises as a beautiful park like setting and serene surroundings. The unit looks good for area, but I do know the area and it is a class C neighborhood at best, here are the numbers. Any advice would be appreciated and thoughts on what I am missing, capital expenditures, etc.. Thanks again.

Building year: 1962,   .42 acres,   100% occupied

As advertised highlights:

• Beautiful apartment in serene park like setting.
• Like new, with new roof, windows, stoves, water heaters,heaters, & plumbing.
• Private back yards for each tenant. Exclusive parking for each unit.
• Very stable long term tenants.
• 8.51 GRM, 8.00% Cap, and 14.54% Cash on Cash Return on actuals!!
• 8.16 GRM, 8.48% Cap, and 16.48% Cash on Cash Return at market rents!!

Purchase price:         235,000

Down payment 25%: 58,750

Balance: 176,250 @ 4.12% for 30 yrs. / 854.00 per month or 10,244 debt service/year

Actual rental income  575.00 x 4 = 2300 per month

Annual gross rent:           27,600

Less vacancy 5%             1,380

Effective rental income  =26,220

Real estate taxes       2,867            1.22% times listing price assessor rate

Property insurance       700

Off site management    900  Tenant manages for 75.00 per month, includes gardening

Water                           2100.00

Common area electricity 120.00 yr. / 10.00 monthly, light in parking, light in laundry

Trash                                744.00 Actual billings, 62.00 monthly

Total operating expenses 7,431.00          28%

NOI 18,789 8% cap rate

Debt service                     10,244                 1.84 debt coverage ratio

Cash flow before taxes 8,545.00 14.5% cash on cash, 75% LTV, 4.12 APR

IF I USE 50% RULE HERE I WOULD BE AT 2866.00 CASH FLOW/238.00 MONTH