REI Math
I have been running numbers on a 4unit NOO, fully rented and think I have good cause to proceed with it based upon the numbers. How does my calculation for cash flow look to more experienced investors, here it goes.
Price $91,000 ( no repairs)
closing cost 6,370
amt financed 97,370 (8.65int)
x.09 constant rate
8763.30/12
$730 monthly pymt
Gross rent $1450
vacancy x.07 (7% -10%)
101.50
gross rent 1450
vacancy diff. 101.50
Net rent $1348.50
utili 900
taxes 1065
ins 1000
mtn/repairs 1200
total exp 4165 / 12
$347.08
Net Rent 1348.50
Expenses 347.08
Mortgage 730.00
Cash Flow $271.42
Any comments about this process or does it look like I've added and subtracted the right way? Lastly I know not to be so expectant that I'll have $0 purchase repair cost and that maintenance and repair would be my $100 a month allocation. 
I would expect ot raise rent 5% in Jan 05
Price $91,000 ( no repairs)
closing cost 6,370
amt financed 97,370 (8.65int)
x.09 constant rate
8763.30/12
$730 monthly pymt
Gross rent $1450
vacancy x.07 (7% -10%)
101.50
gross rent 1450
vacancy diff. 101.50
Net rent $1348.50
utili 900
taxes 1065
ins 1000
mtn/repairs 1200
total exp 4165 / 12
$347.08
Net Rent 1348.50
Expenses 347.08
Mortgage 730.00
Cash Flow $271.42
I don't want to put a damper on your fun, I'm just trying to help.
You might want to re-think some of the numbers. I have found that a 7% vacancy factor is not enough. In your case you have 4 units or 48 months of rental every year. 7% is only 3.3 months of vacancy per year. If 3 tenants move, you lost your cushion and even more if the units need updating or they are located in a less that desireable neighborhood. Also consider your projected Insurance prem. I have a 4 unit and my insurance company decided to classify it as Commercial, my prem. is $ 2200 per year. One last thing, 100% financing will cost you something, higher rate, additional Points and a little thing called PMI.
Good Luck and make $$$
Tom
I'm assuming you mean Interest only when you say "constant rate". Matches your monthly payment.
Call around and get some insurance quotes. It will most likely be higher for a new policy than what the current owner is paying.
What about things that go out like furnaces, water heaters, roofs, driveways, appliances. I'd build up and maintain a "slush fund" or cushion of 15K or so that is there for a rainy day.
Is your interst rate fixed or variable? Rates will inevidibly go up, albeit slowly.
Your numbers seem reasonable. 30% expenses is reasonable, 12.3% cap is good. DSCR is good also. $3253 yearly cash flow.
Keep in mind that this will give you a fair amount of headaches, but won't make you rich. When those days come, you may want to get out of the rental busininess all together. My advice would be to imagine what your life will be like when you've got 10 more of them and someone else is manageing them. ...and then 100...
From the numbers, it looks pretty good.
One last thing.....there WILL be some surprises along the way. Count on it and have a couple extra bucks laying around so it doesn't break you right out of the gate.
Well, I thought for the interest rate one is supposed to use the amoritization chart and figure the "constant rate" of int charged, is this wrong? otherwise I have a rate of 8.869 fixed which would make my numbers a little better. As far as the ins. that is the new insurance policy quote for me to insure that property . Covering property, liability, medical, and personal contents. The seller only paid $378 a yr. He has been very honest as much as I can tell so far and has told me he's made some minor repairs and units have new appliances and hvac. And on top of that he dropped from $98k to $91k bottom dollar he'll take. It's in middle Ga and a click above low income neighborhood. I really want to do it to get my 1st income property under my belt. I'm only interested in 2-4 unit properties and hope to build and sell 2-3 new sfm constructions a yr to pay down income property to speed up my free and clear rental income. I know that's a plan but does it sound like a good one. Thanks for listening.