Newbie needs advice on 4-plex - Posted by curtis smith

Real Estate Investing Apartments
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Posted by Shawn J. Dostie on September 24, 2002 at 20:57:25:

Looks like a goodn’ do an analysis icome vs. expense, check for major repairs, age of furnace, roof,etc… and if you don’t buy it call me.

Shawn(OH)

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Newbie needs advice on 4-plex - Posted by curtis smith

Posted by curtis smith on September 24, 2002 at 10:16:04:

I have been reading the articles and postings for this group for a couple of months. For the last year or so I’ve followed the real estate market in my area and have searched for either a duplex or 4 plex to invest in. I have found a lady who is selling a 4 plex unit that she has owned for 15 or so years. Her husband has passed away recently and she would like to get out from under the responsibility of it. The asking price is 95k. The 4 units are currently rented for $450 each and have been updated in the last year with carpet and paint etc. I have found financing with 10% down and have enough to invest to cover that. Is this a no brainer? To me it looks as thought the unit should return about 6-800 per month above the mortgage cost. Is there something I am not seeing? What pitfalls can you more experienced rental investors see?
Advice?

thanks for any replies!

cs

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Re: Newbie needs advice on 4-plex - Posted by GL(ON)

Posted by GL(ON) on October 05, 2002 at 20:31:57:

It looks like a good deal to me but you need to do a little more checking.

Find out what all the expenses are. TAxes, insurance, water, sewer, heat, electric, gas, garbage service etc. etc. Don’t take her word, check with the tax office gas company etc. or ask to see the bills.

Take the rent: $450X4X12 = $21600

Deduct 10% for vacancy and repairs

Deduct other expenses

The result is NOI, net operating income.

Now deduct the mortgage payments from the NOI and the result is your cash flow.

If you compare the cash flow to your down payment, you may well find you are making over 100% on your money. Is that OK? Believe me, it is not that unusual.

By the way there are at least 4 more profit sources we haven’t even mentioned. Such as tax deductions, amortisation, appreciation and depreciation.

Now you know how people get rich in real estate.