Updated over 8 years ago on . Most recent reply
Trying to analyze a fourplex
Hello everyone,
I am semi-considering buying a fourplex in Clarksville, TN for $400,000 with my VA benefit and living in one of the units while managing this property with my husband.
The rents are currently at $895/mo for units built in 2012/ 3br/2ba each.
The MLS reports says the gross income was $20,585. Not sure why that was so low? Maybe all units were not rented out? Expenses were $2008 and NOI was $18,577.
I have been reading 'The Ultimate Beginner's Guide to Real Estate' and 'The ABC's of Real Estate Investing' and it seems that with those numbers that would only be about a 4% cap rate which is not good at all. Am I correct in that?
Common sense tells me that the rent should be a little bit higher in these apartments which are close to a big army post where even the lowest ranking soldiers make about $1100/mo for housing allowance. Why would I not be able to charge more rent, fill all the units and bring the net income up?
Obviously, I am very new at this so this may be a big leap. My other option is to use my VA to buy a much cheaper home and then use a conventional loan to start buying cheaper investment properties.
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Call up a property manager in your area. Mine was super helpful in providing details about my area.