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Forums » Residential Property, Land, & Farms For Sale » Duplex/ 28% Cap Rate

Duplex/ 28% Cap Rate Subscribe to Duplex/ 28% Cap Rate

4 posts by 3 users

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Alex Price

Real Estate Investor · Cleveland Heights, Ohio


Forum_avatar_avatar-alexprice

Feb 02 '09, 09:07 PM

If you're going to put your money somewhere,
make sure it cash flows! This duplex has a 26%
cap rate, property mgmt. in place, and equity.

Here are the numbers:

Purchase Price: $50K
Rent both units: $600/$600 = $1,200/Monthly
Gross Annual Income: $14,400
Cap Rate: $14,400/$50,000 = 28%
Water/Sewer: $200/monthly
Taxes/Insurance: $250/monthly
Property Management: $120/monthly
Total monthly expenses: $570
Monthly net operting income: $1,200 - $570 = $630
Annual net operating income: $630 x 12 = $7,560
Annual return on investment: $7,560/$50,000 = 15%
Appraised value: $85K
Equity Value: $35K

email Alex at: [REMOVED]

Edited: 06/26/2010 at 07:08AM by Moderator : email & phone removed, use signature or profile


Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado


Forum_avatar_avatar-wheatie

Moderator Pro

Feb 02 '09, 09:24 PM

Cap rate is NOI divided by purchase price, not gross rents divided by purchase price. Looks like a good deal, bu the cap rate is 15%, not 28%.

Edited: 06/26/2010 at 07:08AM

Small_flying-phoenixJon Holdman, Flying Phoenix LLC


Chris A

· Wyoming


Forum_avatar_avatar-csarneson

Feb 02 '09, 09:26 PM

You have your definition of CAP rate wrong.

Based on your numbers above the CAP would be 15% but even that is WAY optimistic since you have included nothing here for maintenance or long term deferred maintenance. Also your tax/insurance numbers look high which might help.

Now I'm not saying that it's not a good investment. Just saying your numbers are wrong.

Edited: 06/26/2010 at 07:08AM


Alex Price

Real Estate Investor · Cleveland Heights, Ohio


Forum_avatar_avatar-alexprice

Feb 02 '09, 10:28 PM

Sorry gents, the cap rate would be 15%, However, as a smart investor always would, a reserve should be kept. This is not optimistic as I've just sold about 5 of these investment properties. Consider the fact that this market has probably the best cash flow in the country and the cost of living is not as high as other areas.

Edited: 06/26/2010 at 07:08AM




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