Real Estate Broker · Indianapolis, IN · Member since 2008 · 455 posts · 16 votes
Apartment buyers,
I have a client wanting to sell an apartment complex in Erie, PA. Using the 50% - 2% rule, please give me feedback on this deal before I advertise it here.
34 Unit Apartment
100% rented - typically very high occupancy
Rents $515 - Market will bear $550
There is almost an acre to develop - maybe self storage?
Asking Price - $875,000
Thanks for your input, it will help me counsel the seller.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
Not feeling a little beat up are you, Stacy? :D
It would be $25,735/unit. With rent of $515, its right at 2%. This is in the range where the 2% rule actually works, IMHO, so this looks good.
A more careful analysis is
Rent: $17,510
Expenses: $8,755
NOI: $8,755
Payment: $5,821 (7%, 30 years, $875K)
Cash flow: $2933
Cash flow per unit: $86.28
So, just a little under the $100/unit/month cash flow goal. If the rents really can be pushed up, you could hit the $100 goal. Price would need to be closer to $800K with the current rents.
That price assumes it needs no work. If there is rehab needed, you need to subtract that off the price.
Real Estate Broker · Indianapolis, IN · Member since 2008 · 455 posts · 16 votes
17y
John,
I am feeling a little beat up from different directions :D , I spent time putting together a 50% - 2% flyer on the St. Pete homes and took it to a real estate exchange meeting and got beat up for including costs of mortage financing. So, when in Rome...
Thank you for your feedback. I'll get all the info together and get this property priced right and posted.
Real Estate Investor · Pittsburgh, PA · Member since 2009 · 73 posts · 18 votes
17y
Stacy,
Can you PM me the address and any other details for this listing? -May be interested.
Depending on the location in Erie/repairs needed - could be a little overpriced IMHO. (Even if it meets the 50%/2% mark - much higher cash flow is common here.)