Updated over 13 years ago on . Most recent reply
6-unit Analysis, my thanks in advance
All,
I'd appreciate any input you all might feel like tossing in. I am looking at a 6-unit building and have been trying to figure out my own analysis and want to see what any of you think...
Size= 6 units ($500/month each -- current market rates, 5 already rented to what seem like good tenants)
Asking: $135,000
Taxes: $2200
The building was bought two years ago and completely rehabbed by the current seller. All utilities separate except sewer. The rehab works appears to be been well done and this place is already rented and ready to go.
Using the 50% rule, and this may be being misapplied by me, it appears to only be a decent purchase at $100k; based on goals: CoCR > 25%, TRIO < 5 yrs, Cap Rate > 6% at $100k it is right on the line of those goals.
Financing through local commercial bank that I have worked with in the past, 5yr 20am @ 5.5% (might be between 5.0 and 5.5), assuming 20% down and about $5k in fees at closing.
My own questions:
(1) Is it generally possible to close commercial with less than 20% down? I have made a few purchases in the past but have never been "creative" with them.
(2) Are the rates competitive? As far as I can tell they seem so.
(3) Am I misapplying the 50% rule here?
(4) What am I not looking at that I should be?
Again, thanks everybody