All Forum Posts by: Greg M.

For the expenses. my tenants are mostly low income.  While we screened the heck out of them and haven't had any issues, the all inclusive nature of the property is what attracted them because most of them don't the credit/cash up front to secure their own electric/water/gas bills etc.  

@Ashley Pimsner

Forcing appreciation is exactly what my intent was, based off my reading here at least I was tracking that as the best/only way to get appreciation on commercials. Comps are generally for SFR or 4 units and below, at least so my reading has made me to believe.

Thank you for the link!

Hello all,

I am curious how exactly banks will appraise a multi unit commercial property. Its a 6 unit building so I know they will value it based of vacancy rate and rental income correct? Is there an exact formula used ie. 3xAnnual Income-Current PITI?

I purchased at $105,000, i have stabilized it, 100% occupied for 3 months now, monthly income of $3700 - $1870 in costs = $1830 a month free cash flow (NOI) not counting for maintence % or CAP EX reserve%

Will the valuation be a multiple of NOI?

I would like to get the property re appraised for potential cash out refi, but I have no real way to even get a ball park figure without knowing the bank formula etc.  

Any help is appreciated! Thank you!

(cost breakdown)

$920 = PITI

$540= gas/electric/water

$370= Management

The $105,000 I currently own is a 6 unit and the one I am looking at for $120,000 is 8 unit,  5 units 2/1, 3 are 1/1s. 

Hello all,

  So I have recently purchased my first multi-family @$105,000 using conventional financing.  Current gross rents are almost 3.5% a month ($3500,00). This area has fantastic cash flows, granted they are mostly C units in C neighborhoods.  I would like to start buying some more, I have received some off market offers to buy properties close to 4 and 5%, one in particular I can estimate at all in costs of $120,000 bringing in almost $5000 a month gross.  The issue is I see Hard Money as my only recourse and I am still hesitant as I have used it before.  Can anyone offer any advice or expediences? I have been reading up everything I can and have heard a lot of good, but whats the negatives?  What issues can I expect?

Thanks all

Thanks, yea it was a challenge.  

Current plan is to stabilize and hold while bringing this property up to standard.  Not likely to get much appreciation but the cash flow is great.  Save up for down payment on next property when I get back to the states, another multifamily to live in one and rent the rest.

I would like to expand more in upstate NY, very similar to midwest prices with great cashflow, but I want to wait a bit to ensure I dont over reach.

Hello everyone,

  So I closed on my first property in Aug and wanted to post it to see what everyone thinks.  A little about me though:  I am active duty military, currently out of the country so I managed this whole deal through a lawyer and real estate agent.  I took the better part of a year to close, but luckily In the end I managed.

The property was not taken care of by previous owner (also an out of town LL) but I think I can make the difference because in town their are only a couple of PMs and they are just awful.  My PM was my RE agent who wanted to strike out on her own, so this is only her second full time property all to herself, she is motivated.

I purchased with 2 units empty, and one only paying $225 a month as he was supposed to be on sight PM.  Last month we had one eviction and raised rents to market rate .

The details:

Description: 6 unit apartment building. Grade C Neighborhood. Full occupancy as of 1 Oct 15. All expenses rounded up to nearest $100 based off 3 year historical prices. Numbers are very conservative based on worst case scenarios.

Assessed market value = $135,000

Offer accepted= $105,000

Cash out of pocket (30% down/legal fees/closing costs/taxes/insurance - $4000 sellers credit for repairs/security deposits)= $41,832

Total financed 5/20 ARM @ 5.5%= $69,752.70

Yearly Income = $42,360- 10% vacancy = $38,124.00

Yearly Expense + Debt Service= $32,640

Free Cash Flow yearly= $5,484

Monthly Income                                                     Monthly Expense

 #1= $750                                     Debt Service (inc. taxes& insurance) = $920
#2= $650                                     10% rent Property Management fee = $400
#3= $500                                                                         Gas&Electric = $600
#4= $400                                                                           Water&Trash= $300
#5= $500                             Property Maintenance, repairs & upkeep= $500
#6= $680

TOTAL MONTHLY= $3530.00                     TOTAL EXPENSE MONTHLY= $2720

All in all I feel I learned a heck of a lot on this first go around, and can't wait to keep it up.  I know of several other out of country investors, and would love to get any feedback on how they do it/ways to make life easier.

Thanks!!

Greg