newbie - first investment

hello and great forum! :slight_smile:

have a chance at my first 3 fam prop.

a little about it:
3-4 bedroom per unit 3 fam.
3 off road parking spots, with more on street.
full basement with storage areas.
prop has lots of repairs so really nothing I must do in short term.

1st floor is open, estimated rent at $950-$1200
2nd floor renting for $1200
3rd floor renting for $950 (currently they get some $ off rent for doing shoveling snow, taking out trash, keeping area clean, etc

Financing, 5% down, 30 year fixed.

Monthly payment is $2700 and includes P&I, taxes, PMI, insurance est at $1500 (located in MA)
Total rents (lowball) is $3100

  • cashflow is approx $300 not including water/sewer and any maint.

If I take in someone on the 1st floor for say $1100, I am at $450, but I have someone that will move in for $950 and take care of the stuff the 3rd floor currently does. I would slowly raise the rents on the 3rd, not to scare them off, to $975, then $1000 in a year so all in call i would be at $3150 in one year so before water/sewer and any maintenance I will have $450 + cashflow and if I put $100 away for maint per month and say $100 per month for water/sewer I will still be at $250 + cashflow.

Other noteables:
Will have between $5K-10K on reserve for house.
House price is $390K in area where city is investing in with new school, road repairs, and new transportation center.
If I market rentals as 4 bedroom, I could take in $1200 per unit which is right around fair market rent for my area, actually $50 cheaper. Of course I would need to take my time with this with some rent increases, so say 3-5 years.

Appreciate any help or comments.

I guess my question after all the blabbering, is projected $250 + cashflow per month a decent investment considering my cost? Possibly up to $600 in a few years with rent increases.

Hello, Your project looks good. The first question to ask is: How is your credit? Next, your financial situation?

Hi Chris, credit and finances are pretty good in my opinion. My mid score was 739 and I have a decent amount in cash reserves to ride out any bumps!

I am talking to some that are saying the cashflow is to low, so I am just trying to get a gauge.

Hello, The cashflow does seem a bit low, but that could change over time. If you can live with the low cashflow, which it sounds like your doing well, then why not go for it.

I think I can live with it, but what is a good number to hit?

Hello, depends on the size of the project. The larger the project, the more you should make. $600 now instead of later would be good. Again, if your happy…

$600 would make me happy.

Depends on the 1st floor rent, I see fair rent for a 3-4 bedroom is $1225ish for my area. Possible 4th bedroom helps with this. I rent it for $1200 and I’m at my $450.

Well, thanks for the input!