All Forum Posts by: Chris Gylseth

Thanks for the replies. We looked at it last weekend. The building is located on Main Street in a college town, and the property manager seems really nice to work with (property managed by store owner that is the only business located in property). Doesn't appear to have been anything but regular businesses and apartments in the area, and the distance to the nearest gas station does not pose any concern. Apparently there's a waiting list of tenants, mostly students, that want to start renting from the fall. 8 apartments, of which it seems up to 4 may be vacant for 1 or 2 months every summer. I am now waiting for income and expense reports, plus a report on remodeling done in 2008, from the current owner. Will see what the true numbers are, but after the visit I suspect they are not as good as first indicated.

We are currently looking at a multi-family apartment building with 8 units + 1 business unit. The numbers look decent, with an estimated cap rate at 15% and monthly net profits at about $700. Although seller has not explicitly said so, I believe there is a bit of upfront equity as well, since the property is listed for $400k, but the insurance value from 1 year ago is at $600k. Before I bring in any inspectors or appraisers we are planning to look at the property ourselves just to asses if it will still be of interest to us.

My question, since this would be our first deal, is what should we keep in mind when doing our own inspection? I know that we need to look at obvious needs for repair, get both income and expense statements, copies of leases, etc. and that we should have a professional inspector to uncover any potential surprises, but before even all that, is there anything in particular that you are looking for that you consider immediate red flags when you assess your investment options?

@Al Williamson I wished I could say I was loaded with money, but there is enough for a start should I want to. Mind that the properties I have looked at are fairly low priced. Each produces about $1,000 monthly rental income, but I'm trying to figure out if they are indeed "taking ground that I can't lose".

Your advice on starting small an make small mistakes at first appears sound, though.

I have learned that buying properties that already have tenants renting is a good way to invest. I've looked at possible expenses related to this, but wonder if there is a 'simple formula' to quickly vet the potential of a property?

Secondly, would it be smarter to start with one property and expand from there, or could I do for example three properties at first? Would there be any advantages or disadvantages to either option? Note: All properties would be located in the same city. They could potentially be paid in full with cash. Is there any reason not to?

Lastly, I've also heard it being stated that if you're going to do it at all - go big - meaning you might as well invest in larger multi-unit properties from the start (100+ units).

I would appreciate the forum's take on this.