Hanford, CA · Member since 2017 · 9 posts · 6 votes
Hello BiggerPockets family,
I needed some helping analyzing a deal in California. I am trying to get into multifamily units, so I have reading mostly Steve Berges books and been learning from the BP site.
There is a duplex, 2 condos- One is a 2bd 1 bath (2 stories), and other is one story 1bd 1 bath. Price is 235,000 and rent generated is 815 from larger unit and 750 from smaller unit. Property is older and may have some opportunity to develop some value, however, I haven't had a chance to look at it.
Using the 50/50 rule, I believe would put the cap rate at 4%.
I am still waiting to hear back about more details. At first glance for a California property, what are your thoughts? All the deals I find in California seem to have very low cap rates. Any advice or feedback is very appreciated!
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
9y
Ooh, okay, well....first warning....never judge a property on any of the "rules". Get actual numbers. Property tax, insurance, utilities (since it's a duplex, there will be some the owner has to cover), HOA if applicable, etc. Then estimate for repairs and vacancy. THEN run the numbers.
I'd be impressed if this property has a 4% cap rate.
Unfortunately, yes, all the deals you look at in Cali will likely have very low or negative cap rates. It's just how it goes.
If you want help running more accurate numbers, check out-