Hey /r/investing,
Below are the details of the potential rental property in front of us.
My wife and I are considering purchasing a four-plex unit in a neighboring city to ours. This will be a private transaction with no realtor as I know the current owners.
The property is 3,432 sq ft with two levels. Each level is 1,716 sq ft with one two-bedroom apartment and one one-bedroom apartment. The property has two garages, one for each level.
The place is fully rented out, with one tenant that has been there for 10 years or so. Within the past three years, the owners have: replaced the roof, 3 out of 4 AC units, 1 of the 2 garage doors, painted the exterior, 1 stove, and put in two new floors (mix of laminate and carpet).
They are asking $179k for it and we are considering offering $169k. With a 25% down payment plus closing costs, it would completely drain us as we would need to bring upwards of $50k in cash to the table.
Below is a link to their three-year financials for the property as well as a projected 2017 with our new anticipated mortgage added.
In the financials, I have highlighted certain things that need attention. Yellow is all the repairs, orange is the taxes and insurance that will be rolled into the mortgage, and red is the non-operating costs the owners use as tax write-offs.
2015 was a bad year as they had two tenants leave them which basically lead to only 3/4 tenants all year. With the fixing up of two different units at the same time, it resulted in a loss in 2015.
The last tab is basically our balance sheet showing all our assets and liabilities. Again, we would have to cash in basically all of our liquid assets to do this deal. However, we make ok money and have a $38k HELOC to fall back on if necessary.
Should I do this? Please give me as much info as possible.
Submitted February 13, 2017 at 10:10AM by magesform http://ift.tt/2lbRu3p
