Sound Like A Good Deal?
I'm looking at a three family (all 4 bedroom units) with the following stats and I feel like it's a good deal...what do you think?
Asking Price $325,900
Unit 1 $1250/mo Section 8 w/ heat included
Unit 2 $950 w/ nothing included
Unit 3 $850 w/ nothing included
Total expenses tax, insurance etc. is $5100/yr
New roof, siding, and windows and newer heating systems. I'd probably look at going 100% section 8 which would increase the income as well as the expenses. The seller is willing to do a 2nd mortgage only if I go at the full asking price. Any feedback would be appreciated.
The best way to decide how good the deal is - to calculate NOI (net operating income). Don't forget to include possible vacancies (usually 10% of rent), interest on mortgage (not principal), repair and maintanence (% is based on how old the property is).
You can also includetaxes saved on depreciation in your total gain/loss calculation .
What is your cash flow? Did you do a comparable sales analysis for 3 family in that neighborhood?
I don't do deals where the monthly income is less than 1% of the purchase price, but that's just me.
[addsig]
How big will the mortgage you carry have to be? How much money do you make per month, extra, after all expenses (mortgage, insurance, taxes, etc.) comes off the top?