OK, here’s the situation:
Triplex, 2 units rented, the vacant is unit currently being rehabbed. One rents for $675/mo.(that lease is up in September) the other unit rents for $525/mo. (on a one-year lease). $1200 currently coming in, $1725 potentially once the final unit is rented.
List price is $163,000. Financing is not a problem. I plan to take out a Home Equity Loan for $33,000 to cover 20%, (@ 8.49% for 15 years), then I’ve found a 30-year fixed rate at 7.5% for the remaining 80%. Current owner is not interested in assisting in financing. As far as comps go, it’s the lowest of any 3+ unit apartment building in the city by far. Everything else is $210k and up.
Current lease calls for landlord to pay water bill up to $100. Anything over is the responsibility of tenants. Landlord pays for common lights with a bill totaling $12/mo.
Here’s how the monthly mortgage payment breaks down:
$909 (80% loan)
$325 (20% home equity loan)
$109 (taxes)
$100 (insurance) – not sure about this one, usually $70-80 for principal residence. Figure higher for rental property.
Total PITI: $ 1442
Add water and common lighting: $112
Grand total: $1554
I can cover the negative cash flow with commission check I’ll get for 3% of the sales price ($4890 - I’m an agent) for at least a year if the 3rd unit somehow fails to rent. If I continue with the property management company, it’ll cost 8% of the $1725 coming in. So: $1725-$1554-$138= positive cash flow of $33/mo. Not as much as I’d like, but the interest rates are good (especially considering it’s an investor loan), and if I can get assistance with some of the closing costs, it’ll be minimal cash out of my pocket.
I’m having trouble with vacancy rates and maintenance (what do you figure for these, and how do you figure it?)
I’d appreciate any thoughts.