Where are you looking to buy in Salt Lake City? I bought a 4plex in the Rose Park area just over a year ago via FHA financing. It has been a good experience so far despite the bumps in the road.
4plex deals are interesting because unlike larger commercial deals, their market value is affected to a greater extent by market comps rather than off of the income they produce. I work primarily in the commercial realm for my day job, and was surprised to realize that I could not raise my value simply by increasing rents, reducing costs, and improving NOI. This helps, but in certain areas you can only raise the value so much before you hit a ceiling on value.
Despite the fact that my 4plex would not trade where I think it should from an income perspective, the good news is that I did not buy the property for appreciation alone, I bought the property for cash flow and it has performed beautifully so far. We rehabbed all the units and have raised rents by well over 20% and will be cash flowing around $1000/month going forward. Based on my go forward 10 year projections cash-on-cash returns should average 44.39% over the next 5 years.
CapRate wise (based on my original underwrite) I bought the property at a 7.11% cap. As I stated above, I probably won't be able to exit at a similar CapRate because of the location of my asset, but I should have some decent equity build up from the improved operations.
Hope this helps, and good luck in finding the right deal. If you would like I know another investor that is looking to sell a 4plex right next to mine, but his is fully renovated already and will likely fetch a premium. PM me if you are interested!
Where are you looking to buy in Salt Lake City? I bought a 4plex in the Rose Park area just over a year ago via FHA financing. It has been a good experience so far despite the bumps in the road.
4plex deals are interesting because unlike larger commercial deals, their market value is affected to a greater extent by market comps rather than off of the income they produce. I work primarily in the commercial realm for my day job, and was surprised to realize that I could not raise my value simply by increasing rents, reducing costs, and improving NOI. This helps, but in certain areas you can only raise the value so much before you hit a ceiling on value.
Despite the fact that my 4plex would not trade where I think it should from an income perspective, the good news is that I did not buy the property for appreciation alone, I bought the property for cash flow and it has performed beautifully so far. We rehabbed all the units and have raised rents by well over 20% and will be cash flowing around $1000/month going forward. Based on my go forward 10 year projections cash-on-cash returns should average 44.39% over the next 5 years.
CapRate wise (based on my original underwrite) I bought the property at a 7.11% cap. As I stated above, I probably won't be able to exit at a similar CapRate because of the location of my asset, but I should have some decent equity build up from the improved operations.
Hope this helps, and good luck in finding the right deal. If you would like I know another investor that is looking to sell a 4plex right next to mine, but his is fully renovated already and will likely fetch a premium. PM me if you are interested!
Where are you looking to buy in Salt Lake City? I bought a 4plex in the Rose Park area just over a year ago via FHA financing. It has been a good experience so far despite the bumps in the road.
4plex deals are interesting because unlike larger commercial deals, their market value is affected to a greater extent by market comps rather than off of the income they produce. I work primarily in the commercial realm for my day job, and was surprised to realize that I could not raise my value simply by increasing rents, reducing costs, and improving NOI. This helps, but in certain areas you can only raise the value so much before you hit a ceiling on value.
Despite the fact that my 4plex would not trade where I think it should from an income perspective, the good news is that I did not buy the property for appreciation alone, I bought the property for cash flow and it has performed beautifully so far. We rehabbed all the units and have raised rents by well over 20% and will be cash flowing around $1000/month going forward. Based on my go forward 10 year projections cash-on-cash returns should average 44.39% over the next 5 years.
CapRate wise (based on my original underwrite) I bought the property at a 7.11% cap. As I stated above, I probably won't be able to exit at a similar CapRate because of the location of my asset, but I should have some decent equity build up from the improved operations.
Hope this helps, and good luck in finding the right deal. If you would like I know another investor that is looking to sell a 4plex right next to mine, but his is fully renovated already and will likely fetch a premium. PM me if you are interested!
My criteria to invest is 10% cash on cash, 8 cap and 1.3 to 1.4 debt service coverage ratio. This is based on actual numbers. I tend to invest in B- to C properties. Don't expect an 8 cap on an A property.
When you buy right, these numbers will increase when you reposition and the property is performing.
i grew up in westchester county myself so nice to see someone from my home county on the forums.
things in SLC are more affordable relative to the tri-state area but finding that first investment property elusive to identify, but i'll find one eventually!!
My criteria to invest is 10% cash on cash, 8 cap and 1.3 to 1.4 debt service coverage ratio. This is based on actual numbers. I tend to invest in B- to C properties. Don't expect an 8 cap on an A property.
When you buy right, these numbers will increase when you reposition and the property is performing.