Is this a good deal ?

Question

I'm looking for a multi family, I came across this one I think looks like a potential buy. What do you think http://www.realtor.com/realestateandhomes-detail/141-N-6Th-Ave_Manville-Boro_NJ_08835_M69687-12179?row=3

Income is 30,300. Expenses 9,387.00 Gross 20,913 Asking price is 279,000 location is NJ

Income is 30,300.  Expenses 9,387.00 Gross 20,913   Asking price is 279,000 location is NJ

Patrick L. · Answer

And who is going to pay for repairs, capital expenses (roof, hvac, water heater, siding, etc), vacancy (figure 8%),  and management (10% for a property manager or the cost of you doing it plus the value of your time.....you don't work for free do you?)?

Joseph Tarallo · Answer

That is witch the current asking price of 279k  I wouldn't even go higher then 260k

Joseph Tarallo · Answer

Estimated Income and Expense:

Rental Income:

1st Floor 2 beds with finished basement and extended kitchen                 1,300.00

2nd Floor 2 beds                                                                                                              1,100.00

1 Car Garage                                                                                                                          125.00

Monthly Income                              $  2,525.00
                                                                                Yearly Income:                       $ 30,300.00

Yearly Expenses:

Real Estate Taxes             $ 8, 187.00  (these taxes can and should be appealed for a lower Assessment  an estimated lower assessment should be about 300,000.00 which would reduce the annual taxes to  $ 6,768.00.)

Homeowners Insurance   1,200.00

TOTAL YEARLY EXPENSES:  $ 9,387.00

The water and sewer will have to be divided between the 2 apartments, the gas and electric are already separated.

The seasonal maintenance (Grass / Snow) can be the responsibility of the 1 st floor tenant.

Income:               30,300.00

Expenses:           9,387.00

Gross:                   20,913.00

Aleksey Vinogradov · Answer

the taxrate is 2.29 so the taxes will be around 6500

Chris Sweeney · Answer

Expenses at 30% of gross?  You will probably find otherwise if you dig deeper.  at 50% expenses it's a 5.5% CAP (i.e. not great) but that's without knowing utilities which would make it even worse.

Patrick L. · Answer

Nope, looks like it'll be a terrible return.  That expenses number is completely fabricated or it leaves out the majority of the expenses.   Looks like the property taxes on that property are $8k+ so no way the total expenses are only $9.5k.  More than likely you'll only see about half of the net that they stated....if you had a mortgage on it you'd probably end up in the red every month.

My guess is they took the standard rent - taxes -insurance = profit sucker formula.  Not included are repairs, capital reserves/improvements, vacancy, any owner paid utilities, and management.