two 5 units side by side...here's the numbers

2 Replies

Hi fellow investors,

Ive been a investor for a couple of years now but new to this site.  I came across 2 houses built in 1890 split into five 1bdrm apartments each.  Landlord pays all utilities. Decent area of town. Lots of rentals in area. Both house are in good condition. New roof on one. Four new furnaces and ac units in one. The inside of apartments could use some updating. Hoping I could get your feedback whether or not you think this is a good deal.

Asking price: 60k (30k each)

Gross Yearly Rents: 50k

Property tax: 2600 yearly

Insurance: 1600 yearly

Utilities: 11,000 yearly

Vacancy: 10% of gross rents  5,000

Maintenance/Repairs: 7,000

Expense 27,200

NOI=22,800

CAP Rate=38%

What do you guys think?

That looks like a great deal to me.

Are all of the units vacant? If not, why is the price so low?

hey Gary thanks for the input.

After recrunching the numbers a more realistic NOI would be 16k

With a cap rate of 26% 

I probably would only go 45k max on the 2 homes which would give me a CAP of 35%

7/10 units are occupied. A solid 4 plex inI a little better area around here only goes for about 70k tops. 

Managing the properties are probably going to be pretty time consuming with most likely high turnover with the types of Tennants that it caters too. The rents are anywhere between 325-450 all utilities paid. If I fix up the insides of them as current Tennants move out then I could easily cater to students that attend a local college here. Most of the homes around do. I'm thinking I would need to spend 2k per apartment to make it a nice apartment.