4 plex right off busy intersection and <1/4 mile from interstate ramp.
2bd/1bth 2bd/1bth 3bd/2bth 1bd/1bth
4 Parking spaces (2 covered) + 4 street parking spots
Purchase Price 325K; 25% ($81,250) down conventional 30yr
Monthly Mortgage Payment = ~$,1250
Fully occupied, rents are $2825 combined.
There is a shared washer/dryer room, listing claims ~$250 income a month
Total Income w/ 5% vacancy factor = ~$2,900/ month
Property tax + Insurance + Water + Trash + Electricity for common areas + Landscaping + $200 Miscellaneous Repairs/Expenses = ~$1,000/ month
+ mortgage payment = $2,250
Yes I know, price is very high. This is just how it is in my area right now. Plenty of jobs and demand for rentals. I have experience managing single family homes. I want experience managing shared walls. I've been shopping 6 months and this is the highest rental income I've seen for my price range (under 350K).
The rents seem very low to me. I know the rents in my area very well. This is a lower income area but the cheapest 1bd/1bth...2bd/1bth...3bd/2bth I ever see advertised are $650/$800/$1100. If I could get these rents the monthly income will be $3,350.
From the outside I can tell the roof is new (installed <6 months ago), the building needs to be painted (lots of peeling already), some window screens need to be replaced. Windows themselves look pretty good. Need mutually accepted offer before entering building. Yard is very small and maintained.
Please critique. Please ask questions. Thank you!
Essentially you are at a 5% cap rate before repairs needed. If you include potential maybe a 6 cap.
If you are committed to your area only then you have to live with what things are selling for.
I have other friends in Denver with the same issue of low caps. What they do is find a building 50% occupied or vacant and then do a full rehab and rent it up. Then they sell at a market cap rate to investors. So if the buy the building and after rehab they are into for a 9 cap then they can price above 5 cap market at a 6 cap and it flies off the shelve.
Just buying existing cap rates for performing stuff it doesn't work unless you are just holding for tax write off and retirement. In those cases cash will be minimal to none in the first 5 years or so.
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