What is the maximum you would pay for this deal?

Question

Well maintained brick 12 unit building on wooded cul-de-sac. Building has (10) 2BR 2 bath with living room, dinette, kitchen, master bedroom with bath and large closet around 1000 square feet each; and (2) 2 bedroom 1 bath units around 800 square feet. All apartments have electric range, refrigerator, dishwasher, hood vent, garbage disposal. There are ten carports and 8 additional parking spaces. Security entrance. Apartments have balcony or patio. Laundry rm 2 washers 2 dryers. Building roof -2006, carpet roof - 2012. On site manger.

Asking $498,000

ANNUAL INCOME AND EXPENSES:

Rent $81973

Laundry $2160

Taxes $13266

Electric $2304

Garbage $1267

Insurance $5123

Maintenance $6827

Management $7800

Water & Sewer $3289

Asking $498,000

ANNUAL INCOME AND EXPENSES:

Rent $81973

Laundry $2160

Taxes $13266

Electric $2304

Garbage $1267

Insurance $5123

Maintenance $6827

Management $7800

Water & Sewer $3289

Bill Jacobsen · Answer

I think the question should be, "what would you pay?"  It depends on your required rate of return and your estimate of the metrics.  The calculations are the easy part.

I, personally, have trouble, determining my required rate of return on various investments such as stocks, buy and holds, flips, loans.  Each investment must compete against my other opportunities.

Good Luck.

Bill

James Syed · Answer

@Tim Cooper

Welcome to BP.

What about Capital Expenditure (Reserves)?

What is the vacancy rate & uncollected funds?

How much are you allocating for advertising & misc cost like bookkeeping, etc?

If you could provide these three figures as well, I could provide an proximate purchase price.

Hope it helps.

Jon Klaus · Answer

What year built?

Class of neighborhood?

Crime rate?

School quality?

Local population growth rate?

Unemployment rate and trend?