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Author Topic: What do you think?  (Read 2131 times)

Offline Brewer

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What do you think?
« on: July 21, 2007, 03:38:43 pm »
So I am looking at a triplex that is a converted SFR.  At first the numbers seemed pretty good:

Asking price - 116K
Monthly Gross Rents - 1,535
Vacancy - 7%

The thing that has me concerned is that the owner pays all utilities and the annual utility cost is $4000 (per current owner)!  Is it just me or does that seem extremely high? 

I have no problem walking away from this property but wanted to get some input from those of you with more experience before I threw in the towel.  If you need more numbers let me know.  Thanks.

Brewer

Offline propertymanager

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Re: What do you think?
« Reply #1 on: July 21, 2007, 06:53:00 pm »
Brewer,

Actually, that utility cost seems low to me.  $4000 per year for 3 units is only a little over $100 per unit per month - that sounds low to me.

Here is how I see the numbers:

Gross rents:  $1,535
Operating Expenses:  $768
NOI:  $767

Mortgage:  $851
Monthly Loss:   $84

I'd pass!

Mike

www.1MinuteToRentalPropertyRichs.com 
This No-Hype, No-Nonsense Book is a step by step course in making money and building wealth with rental properties!  Everything from buying properties at a discount to dealing with terrible tenants.  Now In Paperback!

Offline redefining

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Re: What do you think?
« Reply #2 on: July 25, 2007, 07:18:16 pm »
Can you sweeten the pot by providing shared laundry vending machines for tenants, and partner with a vending company and share in the profits?  That could be another $50 a month which should help offset the loss.

Write all of your leases with tenants on a 6 month basis, so you can raise the rents quickly.  3 x rent raises at, say, $25 each = $75 a month in your pocket, which if added to shared laundry = $125 profit per month.  That'll help a lot.

Our position right now is that there will be a HUGE number of foreclosures available to purchase at discounts in the next 12 months, so don't be too much in a hurry to find the first deal to get.  And with the collapse of the sub-prime lending market, more and more people have entered the rental marketspace meaning supply & demand will work in your favor.  Don't sign 12 months leases since its likely there is going to be a lot of headroom in rental price increases in the next couple of years.

Vlad

Offline aak5454

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Re: What do you think?
« Reply #3 on: July 26, 2007, 10:15:55 am »
I avoid properties where you pay all utilities.  Its a license for abuse and can kill any potential for profit.  Water and trash at most since a lot of cities bill the owner directly for this (no way to shift to the tenents).


Offline Brewer

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Re: What do you think?
« Reply #4 on: July 28, 2007, 11:11:59 pm »
Thanks for the advice guys.  I agree with avoiding properties where you would be responsible for all utilities, that makes since. 

I am still refining my criteria for income properties and all of your advice is appreciated. 

Brewer

 




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