Help with analysis

6 Replies

Please help me figure out if this  is a deal worth checking out

We have no experience but "u have to start somewhere"

8 unit apt bldg 2br 1 bath, four buildings- 1248 sq feet per bldg  on 48,000 sq ft lot

5-10 min drive to downtown area 

13% cap

310k

Built 1960

100% occupied, "1 wk of vacancy in 2014"

Scheduled gross income 57k. (712/unit)  

Rents in area seem to support 650/month 

We have cash and good credit but high d2i so may need investor partner

Thank you

what kind of finacing will you be looking at?   To me how you finance it makes all the difference in the world. 

Michael,

Not sure if I am reading it right but seems your current rents are 712/ month but market is $62 less at $650?

@Michael Kresloff

 knowing the rents is key.  assuming they are $650/month per unit, a quick back-of-the-envelope analysis shows the following:

$650/month rent x 8 units x 12 months = $62,400 gross potential

less 15% for vacancy, loss to lease, concessions, etc = $9,360

Effective gross income (EGI) = $53,040

less 55% expenses (estimate, you need to verify expenses) = $29,172

Net Operating Income (NOI) = $23,868

Applying a 10% cap rate to deal (I can't imagine it is 13% if it's in a decent area) = 

$23,868 / 10% cap = $238,680 value

So $239K is the value of the propery, not $310K?

I appreciate your time responding to me!

Financing will be an issue, as our debt to income is high.  We have cash, lucky us, great credit scores, but don't want to tie it up so may need look for investors. 

So, did you buy it?

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