All Forum Posts by: Marvin Briscoe

Also, as I repeated again above. It was a different building they wanted us to take in a package WITH the 4 unit that couldn't pass inspection. Which has us spooked on the 4 unit from the same people.  The 12 unit is a completely separate deal. completely separate owner. 

 I understand that, what I do not get is if a property sells for 300k and I have to finance 240k after my 20%. payment and escrow would be half of the gross income of the property  . Yes if I was okay with it taking the full 15 years to pay it off, it would be a good deal. 

Thanks for all the respectable responses. to me rental investment is pretty simple as long as you cover the most risks you can. So it's pretty obvious that buying a property for 300k with only 4400/ month income ismt a good deal because after mortgage, taxes and insurance it would take way to long to see a return on this kind of deal even in perfect circumstances which is a pipe dream. What I know is everyone has to start somewhere and by no means am I an "optimistic investor" otherwise I wouldn't be seeking council on the matter. I would have already jumped in. 

I am still fine tuning my understanding so correct me if I'm figuring wrong

12 unit asking price $300,000

Monthly rents @ $4400 (potentially more)

1.46%

4 unit asking price $29,000

Monthly rents $1550

5.34%

@Justin Tahilramani- The reason I dont want to start with a "solid" duplex or Triplex is they ask well over 150k for them around here. Then only being able to rent them out at most $600/month it would take over a decade to get a return on my investment.

The reason for looking at this initially is due to having $60,000 to invest. This give us $30,000 reserve on the 4 unit. Otherwise it's just the down payment on the 12 unit. We don't know the extent of potential issues on the 4 unit as it hasn't been inspected. The inspection was on a 3 unit we were going to purchase with the 4 unit. That building is now off the table. 

Hello, new here to BP and to REI. only been looking to actively get into RE in the past month or so. I have two deals I'm looking at and the numbers are hugely different on each, so I'm looking for an outside perspective. I've been reading articles and other forum posts for weeks now and have been trying to implement the knowledge I've gained from all of you. The one thing I'm still not clear on is Cap Rate. I realize the Cap Rate is basically only useful locally, but when does the potential for problem outweigh the Cap Rate.

For example;

deal #1 - 4 unit apartment building priced at $29,000.

after figuring in expenses, and a 25% vacancy rate it has a cap rate at 28% (32% if we can get it at our offer of $25,000)

Red flags - we were originally looking at this building in a package deal with a house converted into 3 apartments. The inspector walked away after 45mins at that property due to all the foundation and electrical problems. He said he didn't want the liability of writing up a report on such a house and potentially missing something. The inspector told us he wouldn't/couldn't inspect this 4 unit building due to being on a slab (can't inspect foundation/plumbing so it would just be electrical and roof, which is new).  Has us a bit spooked.

deal #2 - 12 unit apartment with laundry on site priced at $300,000 (on market for 866 days) planning to offer less

after figuring in expenses and 20% vacancy rate cap rate is at 9.29%

These buildings are within blocks of each other.  the 12 unit building is 20 years old, while the 4 unit is 80. I think start small with the 4 unit and build from there, spouse thinks go big or go home.  I'm worried about the potential for repair expenses on the 4 unit, but nothing guarantees no repairs on the 12 unit so I don't see it as safer.  I'm looking for an experienced opinion.  Is the greater outlay of money for the newer buildings worth it? or do we stick with what we can manage without the huge loan and build slower?