Help In Analysis?
I am checking out a 4plex in middle Ga priced at $98k. it's fully rented for now bringing in $1450 (350 x 2) and (375 x 2) which is a little low they probably could go for 425-485 with exterior sprucing up and possible kitchen/ba updating. There are some new appliances not sure if in every apt though. fridges, stoves and HVAC. taxes are $1065 and the owner pays $300 annually for ins and $65 a mth for water/sewer/garbage. Finally, he is coming out with a $165 cash flow. With all things considered (help if I've missed any) is it safe to assume cash flow for me would remain consistent. I've done the ProForma with some projected numbers I'm willing to accept for financing and have gotten a positive response. I know you can't trust all calculations but is that fairly accurate to indepth due diligence analysis?
(yearly)
INCOME Currently:
$17,400
EXPENSES:
$1065 property tax
$700 insurance (300 seems very low)
$720 garbage (your figures seem low)
$1440 water (your figures seem low)
?? Rental Housing Fee
$2400 Maintenence reserves
---------
$6325 yearly
Debt Service
$9456 9%, 100% financed
CASH FLOW
$17,400-6325-9456=$1619
or
$135/mo
I don't see how you get $165 cash flow, but this is how I did mine and I used a lot more expenses than you did.
I agree with Frogger, but all that being said, if your goal is to create equity it's not a bad deal...
What about the costs for updating the kitchen and baths? Other repairs? Factor those in and it could take a while to realize "real" cash flow. Also, I'd bet the property taxes would go up once the deal is done, unless the $1065 was a recent tax appraisal. You also need to factor in vacancies, because some of your tenants may bail if you raise the rents. I wouldn't expect a decent cash flow for the first 2-3 years. Just think of it as a foundation for the future.
I didn't ad that I also think it is a good deal, based solely on numbers. Make sure it is in a good appreciating area. I don't dislike the numbers at all.
Keep in mind that I have this financed at 100% too and likely you will have to put some down. In this case MORE cash flow. However, if you have to borrow the down payment, it could get more expensive.
Well, I failed to remember that the assessors last appraisal listed was in 1987, for $87k. I have been approved (90ltv) with a mortgage company that works an investor down payment assistance program for NOO The DP assistance is only for closing and will be presented as my own down payment for the lenders sake. (Int rate unknown but broker stated "lets try to get a better rate). The next step is a paid appraisal which I don't want to eat if the place doesn't app for $98k-123k. but I've been waiting to get some more knowledge on the potential of this property. It's the only 4plex of it's kind smack in the middle of 2-3 blocks of sinfm homes. I''m also ina spec home builing deal already underway and I was hoping to pick up a good rental to bring in something now. My long term interest is to build a few a year and pick up a few multi's a year to replace my military income in abluot 2-3yrs.
I would bet that it will appraise at 98k min. Even a low appreciation from 1987 will get you to 110k+. Cash flow is there, it sounds like a good deal, but you are the final judge, its your cash .
Which mortgage company will do 90ltv on a 4plex? What do you mean by an investor down payment assistence. Can you give a mini example.
What is NOO?
Brenda
NOO= Non Owner Occupied
I'm interested in the DP assistance also. I have heard of these for Owner Occupied but not for NOO. Could you give more info.
Thanx
DP assistance on a 4 family sounds very interesting, especially at the 90% LTV it clearly is not an agency loan.
So if its a non-conforming loan, perhaps the same type of DPA program on a single-family applies?
Let us know, please!
This is a non-conforming loan, however the mortage broker is expecting the rate to be no more than 10%, which was my upper limit. This is my first time doing this therefore I have been slow to pass on info not wanting to send hopeful investors on a financing goosechase so I'll be the guinea pig and if it pans out as I suspect it will be well worth submitting the process, info and contact to you all.
For those of you who posted here with advice or inquiries, here's the latest. I am going to do a purchase contract on this property . The seller dropped to $91k and the property rents for $1450 a mth. (He's working on building in a new subdivision). The loan is 90LTV, 8.68%(9%), 30 yr. No pre payment penalty. The infamous 10% is to be granted as a DP assistance, but only for closing purposes, then will be given back to the grantor and the seller will pay a $950.00 fee for the usage of the face money. Really it is the same as first time home buyers programs, providing the cost of the house is 90% or less of the appraisal allowing the down payment and closing cost all to be added below or at appraisal. So far so good. This is my first rental purchase and it's getting very creative for me.