Income-reducing property--919 Central Avenue, Alameda, CA
Using generous assumptions (30-year, 6% fixed-rate mortgage, 20% down, 1% of purchase price for maintenance, 90% occupancy), it takes a fair amount of money to make a $730,000 fourplex cashflow-positive. You need at the very least $3,500 a month for the mortgage alone, plus $600 a month for maintenance, plus insurance and an extra 10% as a cushion in-between tenants. Add $800 for property tax. And because you put down 20%, you need to make up for the $146,000 you no longer have earning interest at 3%, i.e. $365 a month you're not earning anymore. The ballpark numbers remain conservatively valid if you put down less, because your interest shortfall is more than absorbed by the higher mortgage.
So let's be generous again and assume you can break even with $6,000 in rental income per month, or $1,500 per unit. Given the rental comps (in 2005, you could get a nice 1,000+ sqft townhouse by the beach with a pool and various other amenities for under $1,500), each one of your units would have to be a 1,000-sqft 2-br 1-ba or better, each with a parking space. So we're talking about a 4,000-sqft Victorian mansionette in good condition with a big lot to accommodate the parking situation.
Right?
Not quite (MLS #40347587). 4 units (3x 1-bedroom, 1x 2-bedroom), 2,345 sqft, $749,000
Where did I get the $730,000 from?
Update 8/8/08: Dropped to $719,000.
Update 9/16/08: Dropped to $699,000. Projected income is a measly $42,900, almost $30K below my estimate earlier.
Update 9/24/08: Dropped another $1,000 to $698,000.
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So let's be generous again and assume you can break even with $6,000 in rental income per month, or $1,500 per unit. Given the rental comps (in 2005, you could get a nice 1,000+ sqft townhouse by the beach with a pool and various other amenities for under $1,500), each one of your units would have to be a 1,000-sqft 2-br 1-ba or better, each with a parking space. So we're talking about a 4,000-sqft Victorian mansionette in good condition with a big lot to accommodate the parking situation.
Right?
Not quite (MLS #40347587). 4 units (3x 1-bedroom, 1x 2-bedroom), 2,345 sqft, $749,000
Sure, it's pretty, but not by the beach, and smaller than our comp-based projection by about a third.
[...] Victorian fourlex [...] in good shape [...] concrete foundation added in 1993. All units are currently rented. There is one attached garage.
Where did I get the $730,000 from?You can get a calculator for $1 at the dollar store, and anyone with an 8th grade education can do the math above. Why not avail yourself of that before you put yourself on the hook for three quarters of a million dollars?Last sale and tax info
- Sold 08/03/2005: $730,000
- 2007 Property Tax: $9,722
Update 8/8/08: Dropped to $719,000.
$719000 Fully rented Four Unit Building in the Heart of Alameda (alameda) (map)
Reply to: hous-788639691@craigslist.org
Date: 2008-08-08, 12:48PM PDT
Update 9/16/08: Dropped to $699,000. Projected income is a measly $42,900, almost $30K below my estimate earlier.
Update 9/24/08: Dropped another $1,000 to $698,000.
Announcement: read about EBRD, Inc.'s DMCA content removal complaint against this blog
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