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?

Comments(4)

  • erica22225th October, 2007

    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!

  • mimoca3211th November, 2007

    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

  • NguyenandCo7th January, 2008

    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!

  • ypochris8th January, 2008

    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

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