Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
8y
I dont see a deal here even at the stated numbers. I thnk the real numbesr aren't close to that good. Are the expenses really that low? that is a 27% expense ratio.
Investor / Wholesaler · Erie, PA · Member since 2015 · 120 posts · 18 votes
8y
@Ned Carey Thanks for the reply. I was questioning the expenses too. Most are listed out as "estimated", i guess because the property is that new. What % expenses would you be expecting to see with this size property?
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
8y
I am not a commercial guy. i would guess 40-60% would be the range for multi family. That is a pretty big range and not very helpful. The 60% number came from @Joel Owens as common if the owner pays utilities. I figure 50% for SFHs which works in my market.
Wow, $220,000 per door cost. This must be a trendy water front property. No way that’s going to work, I guarantee you if you put something together at those numbers you would be sorry. Take it from me, I have a 30 unit that keeps me awake at least two nights a week. Not a pleasant situation to be in. I’m happy to share my expenses. I’m no pro like a lot on this site, but I have a fairly good handle on the expenses since I pay them.
Rental Property Investor · Vancouver, British Columbia · Member since 2018 · 53 posts · 18 votes
8y
I think the 1% and 50% rules are both applicable for quick and dirty. It’ll tell you how far off you are. Your Gross is about 300k shy and if it’s true the expenses are that low, this place is run like a SUPER well oiled machine.
Not only would you have to subsidize this property for the foreseeable future, odds are (with all due respect of course and not to question your PM skills), you might expect the expense ratio to increase under your tenure in comparison.
If this property is truly newish, there’s not much that that you can really do that will get you to your break even. I’d would say, that unless you got the price to 65%-75% of asking or you go in with 5 -7 million of your own cash with no concern for ratios like CoC or ROI it’s not going to be a fun property to own. Unless there’s something that is not known about the property which would justify a deeper look.
Real Estate Broker · Greer, SC · Member since 2013 · 548 posts · 271 votes
8y
@Dave Saveri
To give you a creative stratagy, I need to know more about seller. Why are they selling? Their debt? Did they developed? Where are they going with cash?
BTW your expense ratio on one that's this young may be in line with numbers they disclosed. However, that's their T12 numbers. They haven't had to turn a single unit when it's that new. None of the tenants have left yet. The projections your bank will make and DCR they require, tends to push your loan amount down.