Hello all, this is my first post on this site and hopefully isnt my last. So here is my situation, I am in my first year out of college and live in the great state of Maine. My long-term goal is to aquire enough solid, long-term, income producing assets that they eventually take up all of my time... I have found a property in one of the bigger cities in Maine (har har) and was looking to get some advice/opinions from any who think they can contribute... so here goes nothingfully rented, 5 unit apartment building built in 1920. three 2-bedrooms, one 3-bedroom and one 4-bedroom currently rented out for. 475,475,450,550,650 for a total of $2600/month. (personally i believe the rent could increase compared to surrounding rent prices) Asking price is $69,900Here are the numbers i have from the year 2010:Gross Operating Income: 29,640RE Taxes:1512Property Insurance:1894Repairs/maint:927Fuel:6519 (I updated to current fuel prices)Water:786Sewer:774Elec:504Dumpster:864Total OE:13887NOI:15753To me this seems like a solid long term investment (it is old and will obviously need repairs but i am very handy and have connections to help me with any big purchases). The reason they are selling is for retirement and thats about all i have on it now
Price $69,900 Income % of GSI $29,640 GSI 100.00%$ 1,482 Vacancy Credit Loss 5.00%$29,158 Gross Effective Income 95.00%Expenses: $ 1,512 Taxes 5.10%$ 1,894 Insurance 6.39%$ 2,964 Maintenance 10.00%$ 889 Replacements/Reserves 3.00%$ 2,964 Management 10.00%$ 786 Water/Sewer 2.65%$ 504 Electricity 1.70%$ 6,519 Oil 21.99%$ 864 Trash 2.91%$18,896 Total Expenses 63.75%$10,188 Net Operating Income 34.37% CAP RATE 14.5% [correction from 34%] GRM 2.36 The heating oil seems quite high, but overall this is a great looking deal on paper.Your cap rate is huge high, and the GRM (Gross Rent Multiplier) screams, "Buy me!" If the numbers checked out and were verifiable (rents, vacancy factor, and expenses) I would definitely want this property.
Thanks. Does this apply to a 4 or 6 unit apartment building too?