All Forum Posts by: Greg Snyder

Hi Marc: I'm looking into buying property is a state 1,000 miles from my home and found that my local lenders are not interested in lending outside their "home" areas. So, I'm contacting lenders in the area where the property is located. If you're using a real estate agent, s/he should be able to recommend some lenders who work with investors.

Thanks to all, especially correcting me on my CAP rates.

I'm still doing due diligence, but this is what I know so far. Property #1, being two buildings, would likely have some high maintenance costs--more lawn, 2 roofs, etc.--than Property #2. #1 have pitched roofs, #1 may have a flat roof. The pro formas from #1's seller also shows $2100 in "late fees" so I'm concerned with tenants not paying their rent on time. #1's property taxes are much higher ($5600) than #2's ($3800). Although they are only 1 mile apart, #2 is in a bit better neighbor and is closer to major employees and a medical center, which its nursing/medical students and residents would be a good source of tenants. Not sure about separate utility metering.

Hello: I would appreciate anyone's input into my analysis of 2 multifamily apartment buildings I'm looking at. I'll use the asking price for the analysis, although I expect I'd offer less for each of them. Both are in same city, about 1 mile apart. Economy of city is decent but I would not expect much price appreciation in the 10 yrs I plan to own the buildings. I'm relying only on cash flow (not cap appreciation). I'd finance either with a 75% mortgage, 4.75%, balloon payment in 5 yrs, 20 yr amortization period. They are located in another city, so I'd hire a management firm for each. I grew up in the city where they are located so I know they are in stable neighborhoods (not declining but not improving either).

Prop #1: 10 units in 2 adjacent buildings.

Price: $280000

Down Payment $70,000 and Mortgage of $210,000

Annual Rental Income: $47,500

Annual Expenses (incl taxes, ins, mgmt fees): $25,400

Net Operating Income: $22,100

Annual Debt Service: $16,284

Positive Cash Flow: $5,816 (22,100 - 16,284)

CAP rate: 2.1% ($5,816 / $280,000)

Prop #2: 10 units in 1 building

Price: $229,000

Down Payment of $57,250 and Mortgage of $171,750

Annual Rental Income: $56,100

Annual Expenses (incl taxes, ins, mgmt fees): $29,903

Net Operating Income: $26,257

Annual Debt Service: $13,320

Positive Cash Flow: $12,937 (26,257 - 13,320)

CAP Rate: 5.6% ($12,937 / $229,000)

I'll obviously do a thorough inspection done of each building to uncover any capital construction needs or deferred maintenance problems.

Any thoughts? Suggestions? Anything I've overlooked?