What Am I Missing Here
Hi guys,
In the area I focus on I can almost take my pick of single family homes for 30-35k, put about 5k into them and rent them at $800-$900/mo. It seems to be working pretty well.
I am really interested in advancing and working my way up to small apartment buildings, 4-8 units to start. The numbers just dont make sense to me. All the properties I am finding are similar to or worse than this:
8 units for 385k with gross monthly rent of $4000.
And the expenses would be higher because I would have to pay for water and lawn service.
I realize there is alot more that goes into it than Gross rent and Purchase price, but that seems like the easiest way to compare these apartment buildings to my single family homes.
Is there something I am missing that would make a small apartment building be comparable to a bunch of single family homes?
I may be able to get financing for about 80k @ 4% private money and just tossing around some ideas on how best to invest that.
Thank you, I have really enjoyed learning from all the experience on this board.
looks like multi plex units arent priced correctly i n your area; you will need to stick with the sfr model.
good luck
I love the extra land for more units..
There are too many missing facts (expenses) to know if this is a good deal or not. A rule of thumb some investors use is that half of your collected rent goes for overhead and expenses, excluding finance costs. Using this rule of thumb, you have $2170 to pay for principal and interest. My rule of thumb is that the property needs to cover finance costs at 75% of collected rents. At $350K, 5.5%, 30 years... a $1987 payment would need 92% of collected rents, so on a first quick glance I would 1) get a better price, 2) get better financing, 3) plug in higher rent collection. For me, #3 falls under a higher-risk scenario that may not be short-term or long-term attainable.
Regarding "Is it appropriate to ask to see a copy of their Schedule E to get an idea of maintenance costs? " Absolutely. The worst thing they can do is say no. Then you will have to wonder what they are hiding.
You all ways need to get as much info on this kind of deals !! As to not get the screwed /a suprise later
Ask for the Schedule E.