Breaking Down The Deal: A guide to buying investment properties

When it comes to buying multi-family investment properties I run the numbers before I even look at the property. There is no need for me to drive to a property and spend a few hours of my time if I cannot make sense of the deal on paper. Below, I will break down an actual deal that is on the MLS and is available for you or anyone to purchase.

This deal is on a 4-plex (four unit apartment building) in Bellaire, MI. We are going to say you will finance this deal with a conventional loan and 25% down.

Asking Price: $180K

Down Payment: $45K (25%) you could have a partner and each bring $22,500 to the table

Rate: 4.5%

Loan: $135K

Term: 30 year fixed rate mortgage

Will you make money with these terms on this deal? The following numbers are monthy.

Expenses

Mortage: $684.03

Taxes: $215.71

Insurance: $125.00

Other: $75.00

Total $1,009.74/month

Rents: $2,150/month

Cash Flow= $1,050.26/month

As you can see this deal makes sense from a monetary standpoint. As the owner you would be clearing over 1K per month in profit. This 4 plex is fully rented and has been for the past year. The windows and water heaters are brand new as of 2015 and there is a fully renovated apartment on the bottom floor.

The only thing left to do is visit the property to make sure you like the way it looks and feels when you see it. As an investor I would proceed on this deal and go do a property visit and meet the current renters.


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