I currently own a small used car dealership, and have been intrigued with the rental / real estate business.
I have been looking at some quad-plexes. I am just wondering, about how much could be expected in upkeep and management to be able to get a positive cash flow of 200-500 per month.
I have found quad-plexes ranging from 200k-250k some will do owner financing or carry a 2nd mortgage. rents seem to have been around 450-700 per month. ( I believe some of the rents are TOO low.)
A little info about where I am at, I am in Dalton GA carpet capitol of the world, the Hispanic population is growing at 350%-400%, I have found a complex which is located in what has become a Hispanic community.
This complex is 3.5 years old. $250,000, new metal roof. Tenants pay all utilities, the rent is $625.00 a month. There is a really good possibility that the owner will do a 2nd mortgage on it.
Is there any way to make this deal work and provide a good cash flow?? Like what interest rate loan would I need, as well as what terms?? The main thing is I am not sure of how much the expenses of taxes, repairs management etc would cost and am not sure on how to determine most of those things.
I’d pass on this one for my 1st investment.
Figure expenses will be somewhere between 8k-13k annual (depending on taxes, pmi, etc.)
Mo. Rent 2500
Mo. Expenses 1025
Mo. Mortgage 1705 (Figuring 100% financing, 7.25% apr)
Mo. Cash flow -230
If my numbers are off someone please correct me.
I’m a fairly new investor myself although I’ve been a local Realtor for years. For sake of comparison, I recently bought a 4plex in Baton Rouge for 165k. Rents are 550. This one cash flows just over 8k annual after expenses, taxes, property manager, and mortgage.
Don’t rush into a puchase and best of luck.
I don’t want to rush into the purchase thats why I am here
I didn’t think that it would work… I think I determined it might work at 200k. but not 250 no way!!
So how did you find this 4 plex? I know you have realtor experience, but whats some advice you could give on locating more, I found this one by driving around.
Doom, try locating and talking to other landlords in your area, maybe you local REIA. There might be trends and little tidbits that you need to know.
The margins seem real thin on this one. Do not underestimate expenses. Get some more info and make a lowball offer that includes a REALISTIC calculation of expenses and PITI and see if they bite.
Not discouraging you in the least, but a lot of us got burnt when we were all new and excited rushing into a buy because we couldn’t wait to start. Happy hunting man.