Good first deal?

Would you experts out there consider this a deal worth doing as a first deal?

3 Unit. 3rd floor currently rented at $800/month. 2nd floor currently rented at $900/month. 1st floor is vacant and needs new carpeting and a new paintjob, but that’s it. It also has an extra bathroom and should rent for at least $1000/month and possibly up to $1100.

Assessed Value: $281,000

Purchase Price: $160,000
10% down, 6% 30 yr. fixed rate
2007 Taxes: $3400


Edit: Contingent upon Appraiser agreeing with Assessed Value of course.


Have you already researched the rate and someone has offered you 6%, 30 year fixed for a 3 unit?

No I have not. But I plan on meeting with a lender that my girlfriend’s father uses within the next week. Her father has told me he can get great rates. Will 6% be impossible?

You left out prop. insurance. Who pays the utilities? What’s your local vacancy rate? What do you plan to set aside for monthly maint. costs and reserves? Will you hire a property manager and at what price? Find out you exact expenses & income from the rent roll and get back to us with all the numbers so we can give you a correct assessment. :shocked :anon :beer


Pretty new in Real Estate myself; however I do have a few things for you to think about…

Have you had a CMA (comparative market analysis) done? You really should consider it. Even though you are purchasing at 56% below Assessed Value, you still need to be aware of what a similar property is selling for. Think about your area. You obviously see a “good deal” but, do you see potential for your area? If you had to sell in 6mo, could you sell above 160k? Again, I am just giving a few things to think about. Please do not be discouraged. I don’t know where you are located, but I can tell you that here in FL numbers like that would not warrant a “good deal”. This is why it’s important to think about your area, check out other sales within the last 3mo. If you have to go as far back as 6mo, you really are not going to get a good number to compare to.

Let me give you a few examples:

I work for a home builder in FL. Our homes last year were assessed @ 275k for a 2300sf home. Today, that floor plan starts @ 170k and does not hit 200k, even with all the upgrades.
Now, with that said, yeah, it seems as though it would be a great deal, right?? Who’s to say the market is going to take us close to assessed value? And remember, its assessed value, not market value. Don’t see your potential income through assessed value. Because, guess what? Next year your assessed value is going to be MUCH less. Again, this is why it’s important to compare your sale to another of its kind.

Now, a great deal is this----

Fully occupied quadplex in South FL, Gulf access, sold in 2005 for 910k on market as foreclosure for 250K!!!


I do wish you luck in all your investment decisions. If you don’t care to remember anything I’ve said, remember this…

In order to succeed, you must first be willing to fail.

God Bless-


Phlemboy - The tenants pay the utilities. The rental vacancy rate is 4.3%. I plan on setting half of the gross monthly rents aside for operating expenses. I also plan on managing my first property myself. I don’t have the insurance number off the top of my head.

Poetic1 - Thanks for your input/analysis. That’s the kind of stuff I’m looking for. Similar properties within the same city in less desireable areas are selling in the $230-250K range. Being as my plan is to buy and hold for at least 10 years, should I really worry about being able to sell it for greater than 160 next year (not trying to be rude, it’s an honest question)? Either way, I think it would still sell for much more than that if the need to sell it arose.

Like I said, I’m fairly new to this, so I’m open to more analysis/criticism.



Best of luck! Buy and Hold, GREAT PLAN! Too many people are trying to get into REI just to make a quick buck. Best plan: Hold for 5-7yrs and sell. Once you make your first profit, place in a 1021 exchange(forgive me if that is the wrong exchange) and put that money towards your next investment property. If you do that, you can avoid pay capital gains and taxes!!!


Jay. Basically just run the numbers… The ACTUAL numbers from the rent roll. If you you can have positive cashflow after all the expenses. then it’s a good deal. Don’t worry about future resale because a lot can change. If it’s a moneymaker hang onto it and pull the equity out every few yrs. to do more investing. Good luck.

Without knowing all of the parameters it is difficult to give an exact answer. However, you are realistically looking in the 7%+ category for multi-family investment properties.


Here is how I see this deal:

Gross rents: $2,700
Operating Expenses: $1,350
NOI: $1,350

Mortgage (30yr, 7.25%, $160K, NOO): $1,091

Cash Flow: $259 per month, which is not bad (although not quite at the $100 per unit per month that I like

Good Luck,


That is correct…6% on a multi fam investment property is fantasy land. You would do well to walk out with 7% as these guys are saying…