let me know what some may think..... INVESTMENT

Member since 2024 · 4 posts · 0 votes

Hi all,

im new to this but im looking into this property and want to see what you guys think as an investment......would this be a good deal?

Aking Price : $2.3 million

Property TypeMultifamily

SubtypeApartment Building

Net Rentable (sq ft)13,400

Cap Rate6.11%

Pro-Forma Cap Rate 6.70%

NOI $140,615

Units17

Year Built1928

13 1Bed/1Bath And 4 2Bed/1Bath Units

in New Jersey

appreciate you thoughts

thanks

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Greg Kasmer

Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 500 votes

Quote from @Anthony Dre:

Hi all,

im new to this but im looking into this property and want to see what you guys think as an investment......would this be a good deal?

Aking Price : $2.3 million

Property TypeMultifamily

SubtypeApartment Building

Net Rentable (sq ft)13,400

Cap Rate6.11%

Pro-Forma Cap Rate 6.70%

NOI $140,615

Units17

Year Built1928

13 1Bed/1Bath And 4 2Bed/1Bath Units

in New Jersey

appreciate you thoughts

thanks

Anthony - I agree with others that there is not enough information to understand if this is a "good deal". Rather than go into all the specifics I would suggest you read some underwriting books to understand how to analyze these larger deals.

A few that come to mind are:

- Multifamily Millionaire Vol 1&2 (Bigger Pockets) Multifamily Millionaire Book Bundle – BiggerPockets Bookstore

- Hands Off Investor by Brian Burke

- Definitive Guide to Underwriting Multfamily by Robert Beardsley

There are many others out there, but I would suggest starting with those. Good Luck!

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Dan Thomas
Rental Property Investor · Bow, NH · Member since 2016 · 216 posts · 185 votes
2y
Not enough info here to tell.....
Do you plan to finance this or pay cash? Can rents be increased or are they at market? If you finance at 25% down, 25 year amortization and a 7% rate you will not cover mortgage and interest let alone insurance, taxes, vacancy, repair, etc. You may find in this environment you will be asked for 30%, 20 year, higher rate, which makes this deal look worse.
If you pay cash....quick napkin math assuming 50% of NOI for expenses that leaves you with ~$70k which is a 3% return. I doubt you would get even that. There WILL be expenses for a house that is almost 100 years old.
This may be a good deal, IDK, but quick math this is one I would pass and look for something that fits my needs better, but everyone is different.
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Anthony Dre
When someone starts with “I am new to this” and then they provide little details and want to start in multifamily.
That is like getting in a plane versus a car and the pilot is like “I am new to this”…
Curious and do not want to sound mean - but what qualifies you to have the skill set to buy this type of asset ?
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Anthony Dre
OP
Member since 2024 · 4 posts · 0 votes
2y
Quote from @Chris Seveney:

@Anthony Dre
When someone starts with “I am new to this” and then they provide little details and want to start in multifamily.
That is like getting in a plane versus a car and the pilot is like “I am new to this”…
Curious and do not want to sound mean - but what qualifies you to have the skill set to buy this type of asset ?

I’m definitely not qualified but I’m practicing. So I’m not really diving into buying something right this second but I figure if I meet agents or owners I hear and talk with the front line of people who are controlling these assets and go home game plan research until I feel the time is right. So am I qualified definitely not
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Anthony Dre
OP
Member since 2024 · 4 posts · 0 votes
2y
Quote from @Dan Thomas:

Not enough info here to tell.....
Do you plan to finance this or pay cash? Can rents be increased or are they at market? If you finance at 25% down, 25 year amortization and a 7% rate you will not cover mortgage and interest let alone insurance, taxes, vacancy, repair, etc. You may find in this environment you will be asked for 30%, 20 year, higher rate, which makes this deal look worse.
If you pay cash....quick napkin math assuming 50% of NOI for expenses that leaves you with ~$70k which is a 3% return. I doubt you would get even that. There WILL be expenses for a house that is almost 100 years old.
This may be a good deal, IDK, but quick math this is one I would pass and look for something that fits my needs better, but everyone is different.

thanks for your insight
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Account Closed
Real Estate Broker · Minneapolis · Member since 2024 · 16 posts · 10 votes
2y
Not enough information here.
From your other comments, it sounds like you're more interested in learning the underwriting than actually buying this deal. So I'll just leave a quick thought.
NOI is not a fixed number. The seller, buyer, broker, and lender could all have different NOI estimates for the same property. I've seen it happen several times where the seller thinks he's selling a deal at a 6% cap but the buyer thinks he's buying the deal at a 7% cap. Same price, different NOI estimates.
So when you say NOI is $140,615, my first thought was ... according to who? Is that the seller's number? The broker's? Or is that your underwriting?
It's helpful to get comfortable running your own numbers and learning to take everyone else's underwriting with a grain of salt.
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Greg Kasmer
Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 500 votes
2y
Quote from @Anthony Dre:

Hi all,

im new to this but im looking into this property and want to see what you guys think as an investment......would this be a good deal?

Aking Price : $2.3 million
Property TypeMultifamily

SubtypeApartment Building

Net Rentable (sq ft)13,400

Cap Rate6.11%

Pro-Forma Cap Rate 6.70%

NOI $140,615

Units17

Year Built1928

13 1Bed/1Bath And 4 2Bed/1Bath Units
in New Jersey

appreciate you thoughts

thanks

Anthony - I agree with others that there is not enough information to understand if this is a "good deal". Rather than go into all the specifics I would suggest you read some underwriting books to understand how to analyze these larger deals.
A few that come to mind are:
- Multifamily Millionaire Vol 1&2 (Bigger Pockets) Multifamily Millionaire Book Bundle – BiggerPockets Bookstore
- Hands Off Investor by Brian Burke
- Definitive Guide to Underwriting Multfamily by Robert Beardsley

There are many others out there, but I would suggest starting with those. Good Luck!
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