Investor · Chicago, IL · Member since 2015 · 11 posts · 0 votes
Hi,
I have 6 units building that was purchased for $780K in Chicago area. Bought it early this year and bumped up the rent from $82K/year based on the previous owner to $101K yearly rental income.
The property tax is about $9,300/year.
Water and Garbage about $6,000/year.
Electricity about $360/year.
Landscaping maintenance about $2,000/year.
Repair maintenance about $8,000/year
Insurance about $2,500/year
Gross Net about $72,840/year
Please let me know if this is a good ROI and if it is wise to keep it for a long term with this ROI? Any input or suggestions appreciated. Thanks Yanto
Real Estate Agent · Chicagoland · Member since 2018 · 314 posts · 199 votes
5y
I invest in the Chicago area, I'd be curious where this building is. From the numbers you're talking about, I'd be concerned the neighborhood has issues.
Investor · Chicago, IL · Member since 2015 · 11 posts · 0 votes
5y
Paid all cash and COC ROI is 8.67% based on BP Rental Report Calculator. Any suggestions to make it better ROI? Should I get a loan for this to maximize ROI? Thanks
Investor · Chicago, IL · Member since 2015 · 11 posts · 0 votes
5y
The reason I am asking this question because I found this 6 units building for my investor who paid cash and want to know if this is a good ROI for them. I found the building and had my contractor did some work and then increased the annual rent from $82K/annual to $101K/annual. I do not know what is considered great ROI out there for housing investment.
I have 6 units building that was purchased for $780K in Chicago area. Bought it early this year and bumped up the rent from $82K/year based on the previous owner to $101K yearly rental income.
The property tax is about $9,300/year.
Water and Garbage about $6,000/year.
Electricity about $360/year.
Landscaping maintenance about $2,000/year.
Repair maintenance about $8,000/year
Insurance about $2,500/year
Gross Net about $72,840/year
Please let me know if this is a good ROI and if it is wise to keep it for a long term with this ROI? Any input or suggestions appreciated. Thanks Yanto
Based on the numbers above you're at a 9.3% CAP. In my opinion, if the building is truly stable in rent & expenses then it is wise to keep the building for the long term. If you paid cash & can show a lender that the operation is stable then I would refinance it & pull cash to look for the next investment.
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
5y
If the only consideration is how to juice your ROI, then obviously it makes sense to use leverage. 9% COC is less than what most investors look to get for a return.
However, If you are someone who is completely risk averse and hates debt, then that is a whole other topic.