All Forum Posts by: Gail Longenecker

When my 6-plex was fully occupied, the cap rate was easy to determine.  Now that two units are vacant, we are remodeling them and selling the property.  I can calculate a pro-forma (expected) cap rate, but what's a good solution to calculating the cap rate with 2 out of 6 vacancies so that it's still attractive to a buyer?

DR has an amazing process. I'm an FPU instructor and the feeling of being free from the weight of debt is so foreign to my students. It takes a blink of any eye to wander into debt and years and years of being a slave to get out of it. This applies to REI so go into deals with your eyes wide open and a very conservative plan.

Thank you, Taylor. That's a great analysis!  Monthly expenses can be driven down by putting even more cash into the property, but then 1. I need to find more cash and 2. the cash is tied up.  It's a difficult balance to find.  I did unofficially offer $600k.  At that price, it does cash flow $1000/mo on paper and 6% cash on cash return.  Since it has all new appliances and newer roof/window, my capX fund hopefully won't be needed for a while. 

Thanks, Joshua, for the feedback.  Yes, this property's asking price started at $795k and--as you see at $680k--the returns are so low!  If I model it at $600k, the cash on cash return is 6% which is better, but I have to jump through a lot of hoops to free up $200K+. 

The county assessor values it at $400k.  How much do you weigh the assessor value?

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Wow!!!  love the article, love the family, too!