Property is a 2 family plus a large outbuilding zoned and occupied as a daycare.
Offer price: $1,200,000
30% Down payment: $360,000
Loan terms: 20 yr @ 5.5% interest
Estimated closing costs: $15,000
Short term repairs: $5,000
Monthly operating income:
Daycare rent: $7300
Apt #1 rent: $1475
Apt #2 rent: $1200
Total: $9975/mo
Monthly operating expenses:
Mortgage: $5778
Taxes: $1500
Management fee: $250 (paid to myself)
Insurance: $290
Vacancy: $100
CapX: $250
Water/sewer: paid by tenants
Trash: paid by tenants
Lawn/snow removal: paid by tenants
Utilities: paid by tenants
Total: $8168
Cashflow: $1807/mo
CoC return: 5.7%
After raising rents to market value in 2 years:
Daycare rent: $8400
Apt #1 rent: $1475
Apt #2 rent: $1400
Total: $11,275/mo
Expenses: all else same
Cashflow: $3,060
CoC return: 9.7%
Other notes:
Daycare is on year 1 of a 10 year lease, and is interested in purchasing the property later on.
Daycare rent automatically increases by 15% in 4 years.
Daycare pays for all maintenance within building. Owner pays for outer building maintenance e.g. roof and siding
Property is located within walking distance to elementary school, extremely well situated for a daycare business. School system has ranked in top 3 over many years.
None of my numbers factor in appreciation.
Tear apart my analysis!