Hi all. I'm seriously looking at my first investment property. Over the past year or so, I've been researching and keeping an eye out for investment properties in my local area. Last week, a 4-plex really caught my attention.
Market Value: $150,000? It's assessed for $147,500
Original Purchase price: $150,000
Original Mortgage Amount: $112,500
Interest Rate: 4.5%
Mortgage Term: 30 Year Fixed
Term remaining: 30 Years
Amount remaining on mortgage: $112,500
Gross Rents: $30,600
Principal and Interest (the P&I of your PITI - should match with the above info): $570
Taxes and Insurance (the T&I of your PITI): $6,700 annually (~$559 monthly)
HOA costs: N/A
Deferred maintenance notes: Need more information. Based on pictures and a drive-by, the property looks well maintained. Scheduling a walk-through in the near future.
Anything else special or unique in regards to the numbers of the property (not the property itself; things such as city assessments, back taxes, special costs due to unique features of the property, etc. etc.): The property has 2 houses on it. The main house has 3 units and is about 2,000 SF. The secondary house is a single unit with 700 SF. Using
http://forum.mrmoneymustache.com/real-estate-and-landlording/evaluating-a-rental-property/ and other sites like Zillow, Rentometer, and biggerpockets, below are the projected numbers. These will be revised once the house is seen and hopefully actual numbers are known.
Based on iamlindoro's excellent financial spreadsheet,
Annual Monthly
Gross Rents $27,540 $2,295
Expenses $12,896 $1,075 (~52% of Gross Rents)
Prop Mgr 10%
Vacancy 10%
Other Expenses...
Net Operating Income: $14,644 $1,220
Mortgage 6,840 $570
Total Cash Flow $7,804 $650
Cash ROI 18.49%
% Profit 1.48%
Questions- What's the protocol to ask the agent / realtor for the current tenants' lease information / financials? Is this considered taboo?
- I'm thinking about taking out a HELOC on my primary home to pay for the 25% down payment and closing costs. My risk tolerance is very high so this seemed like a good idea to leverage and have a better return on cash. Is this a very bad idea?
- Would you do this deal? Can anything else be done to improve the financials?
- Any other considerations to to think about?
Thanks in advance,
AK