My Potential Deal Tell Me What I Further Need
6 unit building 400,000
Rents 4,400
52,800(yearly gross)
Expenses
gas 4,242
water 1,205
taxes 7,315
insurance 2,200
electric 468
garbage 80
---------
36,410
then minus the management fee and mortgage
this looks like a good deal to me just seeing what others have to say to help. thanks in advance
Also try the www.cashflowproperty.net
They have a analyzer for the multitenant property.
You should be able to access it for free. This will give
you a 10yr projection.
Good luck
-Krish
Minus management fee and mortgage could put you in the hole. This looks like an alligator to me without more information. Such as how much is the management fee and mortgage payments. $400000 mortgage can be Very expensive and even a modest cost can put you into negative cashflow. NOT a good deal in my opinion. I also noticed you kept nothing out for RESERVES or MAINTENANCE or VACANCY FACTOR. You need to have all that before you rate it a good deal. Figure the cap rate and then decide what is your minimum return on investment you are willing to do. YOU NEED TO DO MORE HOMEWORK ON THIS ONE.
Also, how much is your down payment? Are the rents below market? Is the property located in a rent control area?
Hi, just to let you and everyone else know, your expenses add up to about $16,000, not $36,000.
If houses are sitting empty in your area, how are the vacancies in multi-family properties? If vacancies are high is there any reason for you to believe they will drop down due to some external factors such as a new industry in your area? If you anticipate having high vacancies for a long time in the future, I would invest in another area.
My take on buying either a single family vs a multi-family is tainted by my own experience. We own two SFHs and seven MFHs and I prefer the MFHs because we have been pretty successful with renting them.
The question I ask is which type of property will generate the greatest rate of return once its paid off? In my area, one of our fourplexes free and clear will generate at least $1,600.00 per month while our SFH will generate less than $1,000.00. I could increase the income from the SFH by buying a more expensive one that commands higher rents but my market would be more limited if we took that approach. So in my area, MFHs make the most economic sense.
Perhaps someone else will have a different perspective. Hope this helps.
Sep
My thinking is that for the same floor space and other factors homes are more exppensive to rent and preferred over multifamliy apt.. As a result in area where prices are appreciating, houses tend to have higher rate of appreciation as more people are buying homes . In area where prices are going down the multiplexes have better rental rate, as people tend to rent instead of buying and smaller and cheaper place to live.
Stick to the houses!
Better tenants. They Move in to stay.
Better liquidity. If you go broke you can sell a house faster then an apartment builiding.
Better appreciation. Consistently going up due the demand on SFH by the retail market.
Quote:
On 2005-11-19 21:08, anolimitsky wrote:
Stick to the houses!
Better tenants. They Move in to stay.
Better liquidity. If you go broke you can sell a house faster then an apartment builiding.
Better appreciation. Consistently going up due the demand on SFH by the retail market.
I thought it depends on the area your in?
Bring in a money/idea partner, part of a deal is better than no deal all day long.
Anybody? Bueller?
[addsig]
Not the greatest deal in town. After you account for expenses,maintainance and management, the NOI is around 50K. There is no money in this deal for the purchase price of 650K.
Okay, fair enough, then what would be a good purchase price on this property?
[addsig]
10% Cap rate is the benchmark used by a lot of investors. So based on this 500K would be the Sales Price. Now, there are other factors you should consider. Does the building have upside potential. Are the rents below market. Can expenses be reduced. Based on all these factors, you can arrive at reasonable offer price.