So I know what everyone says keep it simple on first purchase but this seems like I have too if I could get it at this price, right?
The kicker, its current in government 515 where there's assistance on rent and lower taxes on property. So these rent rates our my research on market value. Current renters are 62+ or disabled and like it there and could get a voucher with section 8 to pay for my price of current market rent and take it out of section 515 program. These are the numbers and would really appreciate any feedback. Thank you in advance
Gross Potential Rent= $550/month x 8 =$4,600 x12= $52,800 & $475/month x 8 x 12 months =$45,600=
$98,400 + $1,427 laundry= $99,827
Vacancy 10%= $9840
Gross Potential Revenue= $89,987
Operating/Main. Expenses= $18,358
Administrative Expenses= $14,727
Total Utlilties= $8,990
Taxes/ ins right now= $9,888 but taxes would jump to $7,500 per unit so would increase it to $19,888
Media Expenses= $761
Total Expenses= $62,723
Property worth using cap rate of 10%= $27,264/.10= $272,640 x .2 down= $54,528
$218,112 loan at 4% for 25 yr with 5 yr ballon= $1,030/month x12= $12,360
Expenses + mortgage= $75,083yr
Cash Flow= $89,987- $75,083=$14,904/12=$1,242 month
I don't have any knowledge about the Section 515 program, but just from the numbers you provided it seems like a very good return on your investment. Are you getting these numbers from the property owner or are you just estimating?
What is the current occupancy of the property? Does it need any maintenance or repairs done? The price seems low for 16 total units, but I'm assuming it's in a bad area.
That is some thorough summary. So thorough, that I am guessing that were presented to you on a plate, by the Sellers Agent? If so, THAT is where your "keep it simple" approach needs some rigorous checking. (Sellers Agent will give you the same sort of statistics that you might get from a Seminar Guru - asking you to pay for their next Program, to receive even greater goodies)! Cheers...
Actually I contacted the buyer because a broker let it slip he might want to sell. All the numbers are from the sellers property manager then I put the numbers together to come up with an asking price but haven't presented it to him yet. Only the rent numbers are from me which I got from a market analysis of the area. Being in this program had people in a waiting list for this property since they get government funding so occupancy is always good. It's actually in a descent area and was built in 1974 so could use some updates but not bad. My only fear is switching it from the section 515 to the regular market
@Kyle Wollin I've only read a little, but what would cause you to need "switching it from the section 515 to the regular market"? If that program IS only temporary, and your numbers really rely on those qualified Tenants (being a Rural area?), then you are perhaps very wise to have that concern. All the best...
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing