Hey Guys,
Here are the details for a triplex we own, its got a 3br, 2br, and 1br unit.
We lived in the 3br for a few years but moved out last summer. Its located in upstate NY so the taxes are ridiculous.
I have 2 main questions/areas of concern.
1. Estimating expenses. My estimates are way different than what the 50% rule would suggest. Does my estimate seem reasonable?
2. There are large deferred maintenance expenses that need to be addressed within the next few years. Considering them, and the cash flow, do you think we should keep the property or sell it?
Deferred Maintenance | Estimated Cost |
Roof | $15k |
Vinyl Siding | $30k |
Boiler | $6k |
Here is my estimated cash flow:Expense | Yearly Expense | Notes |
lawn care | $800 |
Snow plowing | $1500 | Awkward driveway makes this a bit expensive |
Water and Sewer | $800 |
Electricity | $1000 | Includes landlord paying for electric in 3br unit. |
Natural Gas | $800 | Landlord pays heat for all units |
Vacancy | $2000 |
Repairs & Maintenance | $3500 |
Legal | $500 |
Taxes | $6500 |
Insurance | $1550 | Cheapest insurance I could get |
Property Management | $3250 | Estimated as 10% gross rents. |
Principal and Interest | $8500 |
Total | $30,700/yr |
Unit | Monthly Gross Rent |
3br | $1300 |
2br | $900 |
1br | $520 |
Total | $2,720/mo, $32,640/yr |
This puts me at a
cash flow of $160/mo or $1940/yr which is obviously not great, especially considering the deferred maintenance costs.
What makes me question selling it is that if I do the property management and lawn care the cash flow goes up to $500/mo $6,000/yr which is not so bad.
I'm interested in your thoughts. Are my expense estimates okay? How does the increase in property value from doing the deferred maintenance effect the equation? Can i even sell a house with siding/roof that is falling apart?
Other Case Study Info:
Market Value: 165-175k
Original Purchase Price: 170k
Original Mortgage Amount: 136k
Interest Rate: 4.675%
Mortgage Term: 30 years
Term remaining: ~26 years
Amount remaining on mortgage: 126k