OfflineI'm looking at buying a 4plex in a small town of about 10,000 people where the majority of the demographic consists of low income residents. The 4plex was purchased for $405,000 back in 2005 and after the market crashed the owner became upsidedown and is now forced to do a short sale. I can buy this property for $149,000 and put 5-10% down because I would be moving into one of the units. My interest rate is a 30 yr fixed @ 4.75-5% The other three units are currently renting @ $650 each so I figure I will have a cashflow of about $600 after all expenses. (I added insurance, pmi, taxes, mortgage, maintenance reserves, utlities/garbage/water, yard service and vacancy costs into my expense calculations) Being that the property is not in a fast growing area, I do not expect the property to appreciate quickly, but I need a place to live anyway and I could be making an extra $600 per month and live rent free. Even if I only had 1 tenant, 2 vacant units, and myself in the 4th unit, I would be able to handle the monthly expenses because my income from work could cover that. The 4plex was built in 1995, is in very good condition, and new windows and ac/heater units were recently installed.
I feel in my gut that I cannot go wrong on this deal, but I guess I'm just nervous about it since this will be my first purchase.
Is this a good deal?
You are prepared to hang on to it until the market turns around, it might not be a bad deal.
Does it need rehab?
Is the prop going into foreclosure?
I would be interested how this works out for you....Jan
Only you can determine if $600 PCF is enough for you on a 4 unit building. As long as you are taking into consideration any vacancies that may occur and you are still confortable then it works. How old is the building? How is the roof, does it need any rehab in any of the units, what happens to the security deposits the tenants have put down???
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Yes, I would like to hold on to this property for a long time. My strategy would be to collect the cash flow and build up enough equity to use toward my next investment later on down the road.
It doesn't appear to need any rehab. Everything is in really good condition. Of course I will be sure to have that verified with an inspector. I'm not sure if the property is going into foreclosure any time soon. But I do know that other investors want to buy this thing but so far they have offered less than they are willing to accept.
Thanks Jan!
looks like you already did your calcs. and after a while you can always rent out that 4th unit and move on!
Wishing you great success!
Valerie
Valerie
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I will be setting aside money each month for vacancies and repairs/maintenance. In addition to that I am going to reserve at least 6 months worth of vacancies from my personal bank account. I have more than that if needed. I factored in all the other expenses pretty conservatively so I feel like I'm covered.
The building was built in 1995. The roof and everything else looks to be in good shape. No rehab necessary as far as my agent and I can tell. I will have it inspected to be sure.
The security desposits will be transferred to me.
And with the 4th unit rented out my PCF would be about $1,250. I want to move into the 4th unit for now so that I can get a better loan (less money down)and live rent free.
Thanks Valerie.
Get your inspections done, get some comps done and make sure you have a title search done you never know who has a lien pending against the building. It sounds like you have run the numbers and it will work for you just make sure of the time YOU are required to live there for the loan. Don't run into anything illegal by moving out too soon. Good Luck!!!
"Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude."
Shaun Omar
DSD Investor Group Inc
www.dsdinvestorgroup.net
www.decoscapesinc.com
http://h1.flashvortex.com/display.php?id=2_1315708016_24517_144_21583_70...
solid plan followed by solid advice. Best of luck.
Like Jan, I am interested in hearing how this unfolds for you.
Best of luck.
Dana w/ Crossroads Solutions LLC
http://www.DanaLeigh209.com
http://www.DanaLeigh209.net
http://www.ULostThis.com
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Looking forward to see how everything plays out. Think everything through, we know you will make the best decision.
God Bless
Sandra
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