I am looking at a property (garden apartments) with 20 units, 100% rented. Gross rental income annually is $174,000. The annual expenses are listed as $71,400.
The apartments were built between 2000-2005.
I was wondering if any of you have any ideas about this investment opportunity.
Hey @Mike Albani it's so hard to judge if a deal is good or not on this little information. Put a little more into it. Good neighborhood? Are the expenses high? How do rents compare to others around you? Etc...
What's the mix of units? 2/1? 2/2? Are the rents high, low, or avg for the area? Is there opportunity for improvement? How's the neighborhood?
Thank you @Kelly Byrd and @Cole Johnson . The complex is a mix of 1, 2, and 3 bedrooms. It has a 100 acres of developable area. It includes a leasing office and a maintenance shop. The area is very quiet and rural. The rents are 700, 750, and 800, totaling $14,550 per month. Annual expenses are about $72,000 per year. That includes electricity, maintenance, insurance, water, taxes, management.
1. "The area is very quiet and rural".
2. "20 units, 100% rented".
I would have thought these two statements don't normally appear together.
My next question: what does $50k get you nearby, if you were looking for a single small home instead?
(But that may be an unfair comparison, depending on the value of the 100 acres of vacant land included with this).
You wrote: "Annual expenses are about $72,000 per year. That includes electricity, maintenance, insurance, water, taxes, management". That figure looks low to me. Have you verified? eg. Have you got proof of annual property Tax?
Getting 1.45%/m gross rent is GREAT for some areas, but NOT great for other areas. Which is it, there? My 2c...
@Mike Albani : So what I would do is run this thru the Bigger Pocket calculator for buy-n-hold. If there are numbers the calculator is asking for but you don't have, find out what they are, or decide on a reasonable substitute you can use. Those expenses sound low to me, but I don't know the area. The 100 acres may give you a way to force some appreciation, depending on local zoning regulations and such. Do you have an idea of what you would do with it?
You could always make an offer contingent on due diligence, verifying financials, neighborhood, zoning, etc. Then when you dig into the property if you find something you can't make work, use that contingency to back out of the deal. It's not bullet proof, you could end up in a fight over your earnest money, but it does get you under contract and able to start analyzing the actual records of the property and hopefully it all checks out and you'll close!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you