Help me buy this 8-plex

2 Replies

I am new in REI and just bought my first rental property which was a duplex. I am thinking of scaling up right away while I still have the momentum behind me. I work full time and my wife is stay at home mom and the goal is real estate professional status for her to offset some of my income. I prefer nicer properties with minimal maintenance and quality tenants. I am looking at an 8plex with 2 bed, 1 bath each in my home town. The numbers posted with the for sale ad is this:

NetOperatingIncome 47130

OperatingExpense 26730

TotalActualRent 6155

Based on county records, This property was sold in 2001 for $450,000 and 2006 for $545,000. However in 2017 it was sold for only $380,000. Not sure why current seller is selling only 2 years after considering they bought at what I would consider a deep discount.

Considering these numbers , would you buy this property? How much would you offer? Thanks in advance

Fidelis, 

This isn't enough information to determine if this is a worthwhile property. What is the historic vacancy for the area, what are average rents for the area, what capital expenditures have been done to the property, has the current owner bumped rents or done anything to increase cash flow? What are you willing to spend on the property? Why this submarket vs another? With the current NOI and a 10% cap rate the property is valued at $470k. But there is a lot more to analyze if an investor would buy this property and what they would offer.

@Fidelis O. , admire the hustle to continue to buy property, great work. As far as this deal, I agree with the above post from  @Jeremy Miller ...we need more info. In your operating expenses, are you including mortgage? They seem really high to me. Any time I am getting over 40 % of OPEX I think there is work to be done. So, maybe there are some ridiculous things happening expense wise in the building that is ruining the profit. It doesn't mean it can't be fixed, but to Jeremys point again, there might be some cash needed to help fix. Either way, more info would be great. I Can send over a sheet I use to determine some of this stuff, DM me with your email and ill send it over, or email me direct. 

GL.