Have a question about a tri-plex that I may wholesale?

Question

This lady wants to sell me her vacant triplex that she has free and clear I wanted to know do tri-plexes have a cap rate or noi?

Jon Holdman · Answer

Cap rate and NOI are just calculations, so they can be calculated for any property.  Cap rates aren't commonly used for small properties, though.  Simplest to just advertise the rents and known expenses (e.g., owner paid heat) and let the prospective buyers do their own analysis.  I personally really dislike it when wholesalers quote some NOI or cash flow figure while omitting a number of real expenses.

Andrew Massaro · Answer

I actually encourage my students to run, and present, those numbers to potential buyers.  CAP and ROI need to be run every year, so the numbers we give are technically only for year 1 of ownership.  However, it gives the buyer a good idea of what he's looking at.  If I were a cash buyer, I would appreciate the wholesaler providing me with those numbers.  The more information the better, as far as I'm concerned; whatever makes the buyer's life, and decision, easiest.  A savvy buyer will always run his own numbers.  But, to me, providing these numbers shows me you know what I am looking for, and care about my business.

Mike Jakobczak · Answer

Yea I would run the numbers base on what comparable units go for and see if any repairs are needed to get them to renting condition.

Since you are talking directly with the seller, I'd see if they would be interested in owner financing the deal.  Saves you jumping threw hoops with the banks.

Have a question about a tri-plex that I may wholesale?

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