What would you pay for this?

13 Replies

I know my number, but humor me please for a minute. Use any numbers you would typically for downpayment, terms, rate, etc. Cash, whatever. I just have to check myself.

Fourplex

Rent $575 per unit

Property tax 1.79% of your purchase price

Closing cost 2%

Capex 5%

Garbage $65 month

Sewer 100/mo

Maint 5%

PM 8%

Insurance 2500/yr

well with this lack of info on the market what you are looking for etc i'll throw out a number right around 120k what's your number. 

Originally posted by @Philip Williams :

well with this lack of info on the market what you are looking for etc i'll throw out a number right around 120k what's your number. 

Yes! I had MAX 135K. I just wanted to make sure I wasn't going crazy missing something or miscalculation.

It's listed at 225K...

What has me confused was the 1% "rule" is there but it's not even close to a deal.

The 50% rule is almost met, but again...it's not even close.

Usually, when these rules are met, it's at least closer than 100K off.....

This is my first deal.

for a 10% return goal i would pay 189k max for this deal, thats closing costs and all expenses if no repairs needed, if repairs needed obviously would be less.
Originally posted by @Thomas Manning :
for a 10% return goal i would pay 189k max for this deal, thats closing costs and all expenses if no repairs needed, if repairs needed obviously would be less.

 Is that taking the undermarket rent into account?

@Account Closed no, that is with the current 575/month. with rents at 675/month, max would be 237k all in for 10% return no repairs. I would be careful raising rents that high that quick, $100 may not seem like a lot however at the current rent it is almost 20% more. the property might need 4 new tenants if they cant afford a 20% instant price increase.
@Account Closed no, that is with the current 575/month. with rents at 675/month, max would be 237k all in for 10% return no repairs. I would be careful raising rents that high that quick, $100 may not seem like a lot however at the current rent it is almost 20% more. the property might need 4 new tenants if they cant afford a 20% instant price increase.
Originally posted by @Thomas Manning :
@Erik S. no, that is with the current 575/month. with rents at 675/month, max would be 237k all in for 10% return no repairs. I would be careful raising rents that high that quick, $100 may not seem like a lot however at the current rent it is almost 20% more. the property might need 4 new tenants if they cant afford a 20% instant price increase.

 OK, just trying to figure out how you are coming up with 50k plus more than me. I realize I am giving limited info...and can give more if needed. I dont want to miss a deal due to inexperience.

@Account Closed i wasnt paying proeprty taxes for 189k. new number is 154k all in and short version of my calculation for max investment is: 27,600 (income) - 2,500 (insurance) - 2,000 (garbage/sewer) - 3,500 (property taxes) - 4,200 (15% for PM vacancy,maintenance) = 15,400. 15,400÷10% = 154,000

Account Closed Well part of this that you have to consider is what are your personal goals for this property. As someone stated above he would offer x based on wanting a 10% return. I personally wouldn't buy any rental without at least a 15% return so it makes sense that his offer would be higher than mine. If you wanted a 5% or 20% whatever will definitely change your offer, so consider what your personal goals are. This might lead you to determine that whatever market your offering in may or may not be for you. 

Originally posted by @Thomas Manning :
@Erik S. i wasnt paying proeprty taxes for 189k. new number is 154k all in and short version of my calculation for max investment is: 27,600 (income) - 2,500 (insurance) - 2,000 (garbage/sewer) - 3,500 (property taxes) - 4,200 (15% for PM vacancy,maintenance) = 15,400. 15,400÷10% = 154,000

 OK, thank you. I guess I am not as far off as I felt. 

Originally posted by @Philip Williams :

@Erik S. Well part of this that you have to consider is what are your personal goals for this property. As someone stated above he would offer x based on wanting a 10% return. I personally wouldn't buy any rental without at least a 15% return so it makes sense that his offer would be higher than mine. If you wanted a 5% or 20% whatever will definitely change your offer, so consider what your personal goals are. This might lead you to determine that whatever market your offering in may or may not be for you. 

OK thanks. I feel better. I just thought mu numbers were so far off that maybe I was making a big error in my calcs....the 1% rule, while I understand is not a rule...haha....seems to fail here. Cause I am at 1.5ish with scenarios that will actually cash flow 100/per door.