it’s a triplex that will rent for $2550/month. i can get it for $170K, putting 20% down at 7%. comps in the area have sold for $220-240K over the past 2 months. taxes are $3450 for the year and insurance will be about $1500. Thoughts?
Jay
It isn’t terrible on paper but you give no indication of the condition etc… I wouldn’t do the deal unless I could get it for around 150K
Here’s how I see this deal:
Gross rents: $2,550
Operating Expenses: $1,275
NOI: $1,275
Mortgage ($170K, 30 yr, 7%): $1,131
Cash flow: $144 per month or $48 per month (about half of what I like)
Brockovich got it right - this isn’t a terrible deal, but it’s not good either.
Good Luck,
Mike
hey property mgr, how did you analyze that so quick? how did you estimate the other expenses?
Property Manager- Your numbers are a little off, arent they? with 20% down, the morgage will only be $136K, so the cash flow numbers will be higher.
Jayha
There is a cost of putting 20% down - the amount you could have made with it doing something else with it. You need to account for that to see if the deal is worth putting 20% cash into something.
hey property mgr, how did you analyze that so quick? how did you estimate the other expenses?
Throughout the United States, operating expenses run 45% to 50% of the gross rents.
Mike
The deal is not bad. There is not much room for emergencies such as a broken water heater, etc…But my question is? At what point is the investment supposed to pay off for the owner. I mean, if all you are getting is $48.00 a months plus the tax write offs, I am not seeing the reward enough to justify the huge mortgage. I would decline the deal and move on…too much risk, not enough reward…