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188
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Ryan D.
  • Rental Property Investor
  • San Jose, CA
228
Votes |
188
Posts

analysis help - great CCR/cash flow but low profit/unit!!!

Ryan D.
  • Rental Property Investor
  • San Jose, CA
Posted

I need some help from the community for a gut check on my analysis. I'm looking at a 14 unit complex with rents that are fairly under market. With rents AS IS, the deal (with a purchase price that I think is reasonable) is yields:

  • CCR of 12%, $1,150/mon cash flow
  • Cap rate of 8.7% 
  • but the profit per unit is only $82/month!

Once the rents are brought up to market rate, the property performs really well:

  • CCR goes to an excellent 25% , $2500/mon cash flow
  • Cap rate goes to 12.5%
  • he profit per unit goes up to $170, better but still fairly low.

I'm torn here, the CCR/CapRate/Cash flow has great potential, but the profit per unit is terrible (I make $225-250/mon/unit on all my other properties). Wondering what the community thinks about the profit per unit metric?

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