Is this worth it?

General Real Estate Investing
1

Hi everyone - thanks for reading. I am trying to figure out if i should go for this one or not. I have been looking for sometime now and reading all your great stories.I Would appreciate some input on this one…

4 Unit house in CT. All one bedroom apts . Total 3050 SQ ft
Move in condition for the most part.
New heating, hot water ( each apt has seperate ones), Newer roof siding etc etc.
Previous owner has kept up with maintenance - so its not in bad shape. about 50% widows replaced. Over the next couple of years the other 50% need replacment
tenants pay heat/hot water and electric
I pay water/sewer

Cost - $400000
rental income - $39600 ( Less one months vacancy)
est. annual operating expenses $7775

I am looking at 320,000 in a 30 yr mortgage, 80000 on an Existing HELOC that i have at prime -.5

Is this a crazy approach?

I know this is not a fantastic deal in terms of buying at a huge discount, however its not over priced in the area

I would love to hear your views

thanks

2

If you have worked your numbers and it is in the plus column including allowences for deferred maintenance and vacancy I say go for it. If you want to buy and hold there is nothing better than letting your tenants fund your retirement fund.

Just be sure that you have all the numbers!

3

Here’s how I see this deal:

Gross Rent: $3,300 per month
Operating Expenses: $1,650
NOI: $1,650
Mortgage Payment: ($400,000, 30 yr, 8% NOO) $2,935

Monthly Cash Flow: $1,285 LOSS (OUCH!)

I know this is not a fantastic deal in terms of buying at a huge discount, however its not over priced in the area

You are right, this is not a fantastic deal. In fact, it is a TERRIBLE deal. It doesn’t matter whether a rental is “not over priced” for the area. What matters is whether it makes money or not (as in this case).

Good Luck,

Mike

4

What city is this in?

5
Mortgage Payment: ($400,000, 30 yr, 8% NOO) $2,935

The original post stated $320,000 in a 30 year mortgage. Granted, this may not be a huge deal to you but if you are going to throw numbers around you should use the right numbers. It gives a more accurate picture of the scenario.

6

He’s putting $80k in from a HELOC, there’s interest on that too…it’s not free money and it needs to be paid back as well.

7

its in danbury area. interest from property manager is at 8%. I am not sure that i will be paying that level of interest - 1 pecent makes a big difference.

To me it looks like barly break even. I wam curious if i am missing any thing

thanks

8

It’s negative cashflow all the way. I was just interested where it is as I am in CT also.

9

thanks for the input - its alot of money down to get any sort of cash flow, while i have cash - not sure i want to spend it like this… not the smartest move…

thanks to everyone