Help With Purchase Price
I need some advice PLEASE. I am in the process of looking at purchasing a multi family (3 Unit) In Mass. the rents in this area is between $800 and 1100 per unit a month. I am looking for some advice on what I should pay for a 3 family.
The proformanator in the tools section of this site can help you determine if a property will cashflow. This tool, however, is just a tool and shouldn't replace experience and knowlege.
Although I'll admit that it is not full-proof and there are lots of variables that can affect this I'll share a very simple formula that I once learned for evaluating purchase price of rent property.
Rent X 72 = Purchase Price
so if monthly rent is $950 on each of 3 units then take $2850 x 72 = $205,200
If your amount for rent is not accurate based on local comps then the formula is usless. It can also be affected by property that has high operations costs such as high maintenance, high turnover, owner paid utilities, or etc.