Help W/ Decision On An 8 Unit Property
I am looking into a 8 unit complex in Florida. What should my cash flow be in order to make it worth buying a 668k property?
I am looking into a 8 unit complex in Florida. What should my cash flow be in order to make it worth buying a 668k property?
Based on the current rents it brings in 66k per year right now, not minusing my operating expenses. So typically, if I could raise the rent by say $50. per apartment, it would be worth the purchase... Thanks for the info!
Hold on here! The big red flag was that you said "if I could raise the rents $50 it would be worth the asking price." I do hope that you did not mean that you will pay the asking price with the assumption that after closing you will raise rents because if you did, then you just overpaid by $48,000
8 units X $50 = $400/month or $4800/year
$4800 X 10 Cap = $48,000
The number one rule in commercial real estate is to purchase using the properties numbers as they are today, not in the future! If you are able to increase the NOI through effective management then that is just a bonus for you!
Best of luck!
Monica
Quote:
On 2007-11-11 21:58, mimoca32 wrote:
Hold on here! The big red flag was that you said "if I could raise the rents $50 it would be worth the asking price." I do hope that you did not mean that you will pay the asking price with the assumption that after closing you will raise rents because if you did, then you just overpaid by $48,000
8 units X $50 = $400/month or $4800/year
$4800 X 10 Cap = $48,000
The number one rule in commercial real estate is to purchase using the properties numbers as they are today, not in the future! If you are able to increase the NOI through effective management then that is just a bonus for you!
Best of luck!
Monica
Nice info Monica!
Where are you seeing 6.5% for investment properties? I am seeing more like 7.25%...
That extra .75% 0n $668k is another 5 grand a year.
Chris