how do i make sure i would make money off it?
8500 sq ft
225k per unit
property sub type - garden low rise .. whatever that means
cape rate it 5.5%
.19 lot size
A 5.5 cap rate would indicate a 148,500 noi (rev-exp not including debt service). Debt service 25% down will be around 119,500 leaving about 27,000 for capex. Say 300 per door or 36000. This puts you about 9000 in the hole if it was truly a 5.5 cap. Your cash on cash is deep in the negatives.
@Jeff Greenberg can you explain how you formulated the NOI based on the figures provided (2.7 with a 5.5% cap)?
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Thanks so much for the tutorial!
@Jeff Greenberg Can you explain how you formulated the NOI based on the figures provided (2.7 with a 5.5%cap)?
(5.5%cap) .055*2,700,000=148,500 NOI
A 5.5 cap doesn't pay the bills unless you come in with a large down. Then of course, the cash on cash takes a dump.
Investors buying at a 5.5 cap or lower are buying for several reasons IMHO.
1. Betting on appreciation
2. Capital preservation
3. Value add deal
4. Don't have a clue how to evaluate a property
5. Holding for loan pay off.
6. Need a loss to write off
Can anyone add anymore?
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