RED FLAGS .....

This is an actual proforma from a property I'm reviewing.

At first, I thought I was seeing things or there must have been a typo. When the heating costs of your apartment building is eating up close to 50% of your income, there is a HUGE problem.

One of 2 things are happening:

1. Your rents are way too low

2. Your heating system/method is costing YOU way too much money

This particular deal its a combination of both. The heating is supplied by Natural Gas and the costs for gas in this area is incredibly high. Combine this with low rents and you have a property that runs a deficit on a monthly basis.

This is the reason why most landlords in our area are switching to propane! Even with 30% - 40$ decrease in energy costs, this deal still would not make sense to buy.