Help with a possible deal

4 2 bedroom duplexes and a 2 bedroom house for sale on 2 lots side by side…Separate utility meters that the tenants pay…

Monthly rent for the 9 total units is around 3800… The owner is willing to owner finance 80% of the purchase price…I would just get a loan on the house and that would be his down payment…

Total monthy mortgage payment would be around 2250 a month…It figures to have a yearly cash flow of around 6000 at the current rents…
If I could increase the rent by 4 percent… the cash flow would be close to 7000 per year… The properties are in nice condition… One of the tenants collects the rent, calls plumbers, cleans after renters leave, and shows empty units… She does this for a small discount in monthly rent which i have figured into the monthly rent… I also have figured in 10% vacancy, utilities during vacancies, ins, taxes… And still the cash flow is around 6000 per year… The duplexes all have ref, washer, dryer and seem to be in excellent condition…

Any input would be appreciated…


You didn’t really give enough information, like what was the PRICE?

But let’s try to figure this out, so here goes:
Monthly rent is $422/unit. Your 8 rental units will bring in $3376/month.
You will live in the 9th unit.

Your monthly expenses for the units will be 1/2 of rent = $1688. I don’t see any cash flow. You now have to pay $2250 mortgage payment from the remaining $1688. I presume this includes the house loan. You had to put down some downpayment to get that loan.

You have to come up with $562/month out of pocket to live in the 2-bedroom house. I have not estimated PMI, taxes, insurance or maintenance or utilities on your house. Your payments may be $900 or more a month to live there.

That $6000/year positive cash flow disappeared even before the 9th unit quit being a rental. I think your numbers are too optimistic. Do you have a job with income that could handle 25% vacancy? That’s just 2 units being vacant at the same time, or 1 vacant and 1 not paying. This happens all the time, even in attractive units.

Nine units is a big gulp for a first-time investor. Why does the owner want to get rid of them? Does the bank where you’re getting the mortgage loan know that you are also buying 8 units next door with no downpayment money of your own invested?

This one could bury you. If you don’t have high disposable income I recommend you back off and just buy a duplex for starter property.
Good Luck.