HELP How Do You Make Any Money With Multi's?
Hello HELP with the numbers (see bellow)
I have been trying to find a decent positive cash flow multi (2-4 units) for over a year.
I am located in Northern NJ and I have looked at the entire state of NJ and Orange County NY for properties. Still have not found anything with a positive cash flow.
Here is what I normally find an example-
Property 2 Fam
Price $200,000
Gross Rent Per Year 1% of FMV = 20,000
Allow 1 month vacancy per unit per year reserve = 1666.00
Gross Rent= 20000-1666.00 = $18333
Managment Company= 10% Gross = 1833.00 per year.
Taxes 2500
Insurance (Rough High Estimated at around $1000)per year
Utilites= $500 (tenant Pays but reserve for vacant month.)
So lets total so far
Gross Rent = 18333
tax - 2500
Mangagement - 1833
Insurance - 1000
Util - 500
Maint/repair -1200
Net Rent $11300
Debt Serv Yr=14400 180,000 Loan at 7% 30yr
Net Loss =$-3100
AM I MISSING ANYTHING??
Even if I put 20% down, I still have negative cash flow. Most of these properties are in areas like Paterson, Newark, Trenton, etc and do these areas even experience any appreciation in value? Thank you for your time and input!!
Joe Kudlack
feel free to email me as well just look at my profile
Just like anything else....
-Run your numbers, make sure it makes sense (this deal doesn't)
-Buy low, sell high.
-Buy from motivated sellers.
This property is a cap of 5.6% That's terrible in my opinion. The DSCR is 1.13. You'll have a hard time getting it financed at that rate (they usually want 1.25). GRM is high also (120 or 10 depending on how you calculate it).
THIS IS NOT A GOOD DEAL.....EVEN IF OTHER PROPERTIES ARE SELLING FOR MORE (Unless you know something that no one else does).
What makes you like this property??? Are you just trying to get into SOMETHING?
Your calculated expenses are at 43%, which is probably about where they should be if you're using a management company. By the way.....why use a management company??? It's a duplex. #1. Good management is nearly impossible to find for small properties (that's cost effective) and #2. It's not that much work. Get one of the neighbors or tenants to shovel the walks, mow the lawn, take out the garbage. If all you have to do is rent it twice a year, how hard will that be for you? Besides, how will you know if your mgmt company is taking you to the cleaners if you know nothing about property management? I'd do it yourself for a year or two to learn it, and then farm it out.
Look at enough properties that you'll KNOW a good deal when it comes your direction.
Hello
Thank you for your reply. It seems like NJ is a tough place to invest? Does any one have an opinion on investing in NJ? What areas of NJ? It seems I can't find anything decent, I have spent alot of time looking. Most of the deals are like the one I posted or worse!!!
Thanks!
Joe