Newbie

7 Replies

I just found the property on lootnet. Can somebody tell is it good a bad deal? Im new

Two buildings with 8 units per building with parking space between. Monthly gross income =about $5,550 per month. Three 2 bedroom units rent for $375 each X 3 =$1,125 and 13 one bedroom units rent for $325 X 13 =$4,225. Plus laundry room brings in about $200 per month with two coin-op washers and two coin-op dryers that go with sale. Built in 1977
Total 16 unit
Sell price: 330,000

Not enough info to evaluate if it's a good deal... but based on the math, $5,500 + coins a month at $330,000 it is definitely worth exploring further.

@Jay Yiu  

1 beds can be expensive and difficult given turnover.

Expenses should be 35% of gross.

A prop should be renovated every 15 yrs

Paul

Originally posted by @Nathan Emmert :

Not enough info to evaluate if it's a good deal... but based on the math, $5,500 + coins a month at $330,000 it is definitely worth exploring further.

So what els info to need to evaluate a good or a bad deal?  Any quick tips? 

Originally posted by @Jay Yiu :
Originally posted by @Nathan Emmert:

Not enough info to evaluate if it's a good deal... but based on the math, $5,500 + coins a month at $330,000 it is definitely worth exploring further.

So what els info to need to evaluate a good or a bad deal?  Any quick tips? 

What are the taxes? What is the property insurance? Do you require flood insurance? Do you pay any utilities? What do the utilities run in your area? Is there any deferred maintenance? How much have they been spending on maintenance? Are there any CAPEX things coming up soon? What sort of vacancy has the property typically run? Are the units rented at market values? Are there leases in place? Are those tenants actually paying their rent or are they warm bodies?

All you know right now is what they are asking, you have no idea what it is worth.

You need to understand how much is going to come out of pocket in the near term... i.e. getting the property "performing".  That could require repairing things, improving things, evictions, etc... that all needs to be figured into your cash outlay.

You need to have an idea of what sort of GOI you'll generate.  That will depend on typical vacancy rates for the area and market rents for the property you'll have (how much you spend above based on your definition of performing may alter this... slum lord?  Taj Mahal worthy upgrades?)

Then you need to understand your NOI... what are your expenses going to look like on the property. Look at some historical data but realize it's probably not all inclusive, use some of your own judgement (if, including vacancy, your expenses are less than 45%, you're probably missing something).

Once you have NOI you can look at your debt servicing and figure out cash flow from there... that's the process... A, B, C, D...

@Jay Yiu   Is the property in Fort Smith? I'm just up the road in Fayetteville. @Nathan Emmert pretty much hit the nail on the head. Along with everything he said, also look at the area as far as jobs and potential for future growth. Obviously its being sold for a reason, your job is to figure out why and what value can you bring to the table to make the property as profitable as possible. 

Originally posted by @Max Shaw :

@Jay Yiu  Is the property in Fort Smith? I'm just up the road in Fayetteville. @Nathan Emmert pretty much hit the nail on the head. Along with everything he said, also look at the area as far as jobs and potential for future growth. Obviously its being sold for a reason, your job is to figure out why and what value can you bring to the table to make the property as profitable as possible. 

 Yes this property in fort smith

Originally posted by @Nathan Emmert :
Originally posted by @Jay Yiu:
Originally posted by @Nathan Emmert:

Not enough info to evaluate if it's a good deal... but based on the math, $5,500 + coins a month at $330,000 it is definitely worth exploring further.

So what els info to need to evaluate a good or a bad deal?  Any quick tips? 

What are the taxes? What is the property insurance? Do you require flood insurance? Do you pay any utilities? What do the utilities run in your area? Is there any deferred maintenance? How much have they been spending on maintenance? Are there any CAPEX things coming up soon? What sort of vacancy has the property typically run? Are the units rented at market values? Are there leases in place? Are those tenants actually paying their rent or are they warm bodies?

All you know right now is what they are asking, you have no idea what it is worth.

You need to understand how much is going to come out of pocket in the near term... i.e. getting the property "performing".  That could require repairing things, improving things, evictions, etc... that all needs to be figured into your cash outlay.

You need to have an idea of what sort of GOI you'll generate.  That will depend on typical vacancy rates for the area and market rents for the property you'll have (how much you spend above based on your definition of performing may alter this... slum lord?  Taj Mahal worthy upgrades?)

Then you need to understand your NOI... what are your expenses going to look like on the property. Look at some historical data but realize it's probably not all inclusive, use some of your own judgement (if, including vacancy, your expenses are less than 45%, you're probably missing something).

Once you have NOI you can look at your debt servicing and figure out cash flow from there... that's the process... A, B, C, D...

 Thanks for the tips. Really hepeful