Need help in knowing if this property is a good investment opportunity. $480,000, 10 Units (all are rented), $4402 Income per month, Annual Taxes $1272, Annual Insurance $2400, Pest Control $1200/ year, Maintenance approx $250/mth (according to current owner).
Thoughts? I'm new and it seems to me like a good cash flow per month but I would like to add in a Property Mgr - what cost would that add?
Investor · Stratford, CT · Member since 2015 · 258 posts · 230 votes
7y
Without knowing the class, condition, vacancies, location, and upside potential of the property it is hard to say whether this is a good investment. However, the rental income at 100% occupancy is less than 1% of the asking price, so unless the rents are substantially below market, it may be overpriced. Also, the rents average $440/month/unit, so I'm guessing this is a C or D property? If so, you'll be taking on extra risk, work, and headaches and deserve to be rewarded better for that. Maintenance and repairs at 5.7% of rental income? That's pretty low. Depending on the property, 10% might be closer. A property manager will cost you 8-10% of rental income for full service. Insurance and taxes look low too. You should verify ALL of these numbers.
Realtor · Martinez, CA · Member since 2017 · 28 posts · 6 votes
7y
It depends on your area and connections, but based off of what I know and since the unit count is on the lower I would think your looking at least a %10 management fee.
How do I determine the class of the property? (you mentioned C or D property). Is there a good rule of thumb that the Sale Price of the property should be a % of the rents? If so, what's a good %?