Newbie wetting feet - potential inheritance of 250K

General Real Estate Investing
1

Hello Gurus,

I am a newbie, who got interested in the REI recently. Been reading a lot on the forum and would need advice on a potential property

Here are the details

Asking price 104900.00

Property Features
Multi-family Property
4 total unit(s)
Year Built: 1983
Parking features: 2 Car/Unit
Heating features: Baseboard Heat
Interior features may include: Unit 4/1Story, Flooring is: Carpet, Vinyl
Exterior construction: HardBoard/Masonite
Unit 1 is 680 sq. ft.
Unit 1 is renting for $ 480
Unit 2 is 680 sq. ft.
Unit 2 is renting for $ 480
Unit 3 is 680 sq. ft.
Unit 3 is renting for $ 480
Unit 4 is 680 sq. ft.

Here is my take on it

Make a starting offer for 85000 with a downpayment of 20% (17000)

GRI= 480412=23040
NOI=0.523040=11520
Debt Service(7%)= 45212=5424
Cash flow = 11520-5424=6096=127 per unit per month (although based on the downpayment)
ROI on downpayment = 6096/17000 = 35.85%

Make a max offer for 95000 with a downpayment of 20% (19000)

GRI= 480412=23040
NOI=0.523040=11520
Debt Service (7%)= 50612=6072
Cash flow = 11520-6072=5448=113.5 per unit per month (although based on the downpayment)
ROI on downpayment = 5448/19000 = 28.65%

My questions are

  1. am I missing anything in my analysis?
  2. Is this considered a good deal with the 2 offers (starting and max)
  3. What should be my next steps?

I have good credit score 750+ and liquid assets worth 25 to 30K. I am expecting another 50 to 60K in the next 1.5 years and another 250K in the next 2 yrs that I would be inheriting.

So what should be my strategy to effectively leverage my cash position?

Thanks a lot
Caryboy

2

I visited the property a while back, found all the doors and windows closed with wooden boards. Obviously no tenants and gave me a feeling that the neighbourhood may not be safe. I am immigrant f :helprom south asian descent and was looked with suspicion by folks around. Didn’t know if I would dare to go during the night.

I have been noticing that there aren’t any properties in a decent neighbourhood that would have a positive cash flow with the 50% allocation of expenses.

Not sure what to do :help

3

If the neighborhood doesn’t feel safe to you, it won’t feel safe to future tenants. It was a good idea to go there at night and have a look around.

You are just starting your search, so don’t give up! Other landlords on these sites have looked at 100 properties before finding one that was a good deal.

Why don’t you find the the neighborhood that feels good to you, and then canvas it extensively? Know the price of every piece of real estate that hits the market. Then you become an expert in that area and when a great deal comes along, believe me, you will recognize it.

Good luck, and keep us informed of your progress. Take lots of notes in a notebook about values in your chosen area. Keep looking.

Furnishedowner