Updated over 8 years ago on . Most recent reply
Please help evaluate this deal
Hi all,
First time poster and first time investor from southern NJ. Please let me know what you think about this deal. Please excuse the layout of these numbers, it didn't transfer well.
| Unit 1 | 10098 | |
| Unit 2 | 10098 | |
| Unit 3 | 10098 | |
| Unit 4 | 10098 | |
| Gross Income | 40,392 | |
| Vacancy @ | 8% | 3,231 |
| Effective Gross | 37,161 | |
| Expenses: | ||
| Taxes | 6,640 | |
| Insurance | 1,384 | |
| Utilities | 900 | |
| Misc. | 870 | |
| Water/Sewer | 3,482 | |
| Management @ | 3% | 1,115 |
| Replacment Res @ | 5% | 1,858 |
| Total Expenses | 16,249 | |
| Net Operating Income | 20,912 | |
| Loan amount | 150,000 | |
| Interest Rate | 5.00% | |
| Term | 300 | |
| Monthly Payment | $ 876.89 | |
| Annual Payment | 10,523 |
The property is listed at 225K but i believe is overvalued and could be gotten for close to 200k. The loan numbers reflect that in my calculations. An LLC has been formed with a partner and 25% will be put down on a commercial loan. The apartment is also 100% section 8 occupied with a very solid rental history. The former owner managed the property himself and said the NOI is closer to 26k, if i was to go that way. A few additional questions, what are your thoughts on section 8 tenants? Can i legally raise rent on section 8 tenants? Is the cash flow on this property good enough for me to ignore the fact that I DO NOT KNOW what will happen to real estate values in this town in future years. It is not a ghetto or a crumbling town but i would not expect heavy long term appreciation, im just unsure. This deal caught my eye because it is very difficult to get this much cash flow with such a low purchase price in my area. Any help is appreciated. Thanks
Most Popular Reply
Property management should be at 10% not at 3%.