OfflineI am having trouble with cash flow. I am looking at a fourplex here in Arizona. The units are renting for $650 each. I have used worst case situations with my cash flow chart. I am using current taxes which will go down. I pay water, sewer and trash. I have the insurance in, maintenace in, miscellaneous of $3000 in, pest control, management fees of 10%, vacancy rate of 10% and my total expenses are $17,000. My net operating income is $11,112. The total debt service is $4,050 which leaves a positive cash flow of $7062. That is a positive cash flow of $588.50 per month. My question is...what is wrong with this picture? I have not made an offer yet and it has been sitting on the MLS for 119 days and they just dropped the price $5,000! What am I waiting for?
Tom
I don't know--is it in a less than desirable area? Are there any major structural damages--of course, that can be determined by an inspection and you could get out of the deal if there was. Sounds good--are you going to make an offer?
Have you or anyone on your team seen the property? Why are they selling? Why's it been on the market so long? Most of the great deals get taken within days or weeks, they don't sit this long unless there's a good reason. I'd dig deeper. Best of luck!
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
Thanks for your reply Julie. Unfortunately the internet shows only the front. When I cannot get a good picture I go to google maps and put in the address. Unfortunately again the map leaves me down the block and will not let me drive it up the block where I need to be. I cannot tell what kind of neighborhood it is. The property is about 120 miles from me. I search different web sites and look at alot of property online. I gather all the properties that I am interested in and do cash flow analysis on each one. The ones that would give me a reasonable cash flow I go look at. Since it is so far from me I want several properties before I make the drive. When I get one I like I put it through Dean's Real Estate Analysis System to get a value for the property. Then I am ready for a look! Thanks!
Tom S
Hi Elena...
I have not seen the property yet. It is 120 miles from me. I cannot get a look on google maps. The cash flow is good. Dean's Analysis shows it to be worth $192,000 and they are asking $67,900. I have looked at all the info and it is a foreclosure and sometimes there are multiple offers on them and that is why they take so long to disappear from the MLS. It sold in October 2006 for $355,000 and now they want $67,900 for it.
Stop half-a$$ing
Take a weekend to drive down there, make an appointment to see the place and if you like what you see, make an offer
Nearly $600 a month cashflow is better than $0 a month cashflow
And if it is in a less than desireable nabe, put that to your advantage; offer even less, fix it up within reason and raise the worth of the property
People to this day make their fortunes from buying in 'transitioning' neighborhoods; why not follow the trend???
Even if that doesn't pan out, you might just find a gem in the area that works for you.
Hope this helps
If you stand to make $588/month cash flow then what are you waiting for? They're not going to bring the property to you...no matter how long you wait. Hop in the car and take the one time 120 mile drive. It's for your own benefit.
Hey cash flow, can you see. I can see you making money on this deal if you just take a drive over to look at it. You have already done the work why not?