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Buying & Selling Real Estate

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Austin Davis
Pro Member
  • Investor
  • Cedar Rapids, IA
77
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203
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Correct way to evaluate a 4-plex?

Austin Davis
Pro Member
  • Investor
  • Cedar Rapids, IA
Posted Aug 29 2015, 04:33

I purchased my first properties off market not too long ago and pretty much made up my own way to evaluate them. Probably not the best decision as a newbie, but I think I did OK. I made a spreadsheet that subtracts my desired cash flow from the NOI to give me a mortgage payment. It then calculates an offer price based on that mortgage payment instead of using the cap rate method.

Since 4-plexes are right on that border of residential and commercial, I wanted to see if I did the correct thing by basing my offer price off of the income of the property or if market value should have played more into the equation.

I got excited to buy the first time, but I will reach out for help BEFORE next time.  Thanks, everyone!

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