4-Plex Analysis Fresno, CA
Dear BP, I have a 4-Plex that grosses $28,880 per year ($2400 x 12) and all units are fully occupied. In order to calculate my overall cap I did the following (annual basis):
Gross Income = $28,800
Less: Vacancy (5%) = $1,440
Less: Taxes = $2,800
Less: Insurance = $1,200
Less: Maintenance (5%) = $1,440
Total Operating Expenses = $6,880
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Gross Income less Operating Expenses = Net Operating Income
NOI = $28,800 - $6,880 = $21,920
Cap Rate Overall = NOI / Sales Price ($21,920 / $280,000) = 0.078 or 7.8% Cap Rate
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Notes: Actual taxes are closer to $2,000 I changed it to $2,800 based on sales price which is closer to what it will be for the new owner. Vacancy is hard to measure I used 5% but would like to know what you all think. Insurance is based on actual current owner expense. Utilities are on tenants. Garbage is on owner currently but new owner can add garbage charge to tenants or raise rents by $40 each.
Based on a 7.8% cap rate for a 4-Plex in Fresno, CA what do you all think?