Newbie looking for help on analyzing Deal
Looking for advice on this property
7 unit which needs to be converted back to 5 as city only allows it to be zoned 5 unit. 4 units and a small commercial space (hair salon)
currently set up as 1- 3 bedroom 1- hair salon 5 bach
would convert to 1- 3bedroom 1 hair salon 1 -bach 1- 2 bedroom and 1-1 bedroom(possibly 2 bedroom)
Asking price $199,000
current Rental income 7 units
1 3bedroom $1000
1hair salon $600
5 bach $500
rental $4100
after convert to 5 units
1- 3 bedroom $1200
1 hair salon $ 600
1 bach 500
1- 2 bedroom $850
1- 1bedroom $700
rental income $3850 less money but has to be done to abide by city
total $46,200
expenses based from the 7 unit last year could be little lower with less units
power $6700
property tax $7400
water 1950
garbage $1000
repairs $ 2540
insurance $3500
vacancy rate $385 (10%)
total $27710
mortgage on $150,000 - $850 -$10,200
total $37910
income 46,200
net income +8,209 before repayment of $50,000 downpayment back to my line of credit $833 based on repaying back in 6 years ( is this normal practice?) would like to payback before have enough equity to refinance $833 - $9996
which then would bring net income to $ -1706
How can I make this property work?
also that is not including $15000 that would need to be put into building to make the units right.
any advice is greatly appreciated
Most Popular Reply
You a buying a business (cash flow), not a building. If the cash flow is 24% less than advertised, then it would follow you would pay somewhere around 24% less for the business ... which is closer to $48K