Hi REIculb From WA,
Its great reading in these forums! Need advice.
7 unit studio apartment bldg. . .Early 1900s
These #'s are approx
List Price $600K
Suppose SOLD @ $550K w/ 10% DN
Total Expenses $12500
Gross Adjusted Inc. $49000
Net Operating Inc. $37000
Cap Rate 6%
6000 SF Lot
4500 SF Rentable
Would like to buy-hold-sell/renovate…if possible. Building has good bones & great location. Area has been rezoned to accomodate 6+ story.
:flush my THOUGHTS??
The expenses appear to be WAY OFF! Throughout the United States, operating expenses run 45% to 50% of gross rents. So, I’d say the true NOI is more like $25,000. With a mortgage payment of about $60,000 per year ($600K, 8%, 20 year, commercial), this is a HUGE LOSER.
Thanks Mike…I’ll keep lookin
well what about the rents? how do they compare to market rents? low? high? even?
also, what about renovations? are there specific renovations that can be done to increase value? increase rents? increase other income areas?
also, depends on what you bring to the table in terms of cash, cash reserves, etc.
you say 10% down on 550k - in NY, that will be a TOUGH loan to get with that little down - can you put more down? other financing options?
what’s the story with current ownership?
is it managed poorly?
with that little down - either way, without the reserves to manage it (advertising), increase value (amenities, grounds, other income revenues, etc) - yeah that’s a big loser because you don’t have the mula to do it.