I found 6 duplexes and 1200 sq ft house, pool garages,outbuildings,five acres, always stay 100% rented. Tax value is 505,000. He is askng 530,000 I want to have some creative offers for him as he is 80 and would take back some or all financing. Monthly income is 5500.00 No repairs needed. Owner is meticulate and grounds are great. If he take back mortgage and I’d save on closing and going through bank, what would you experts offer or give. 8 1b/b, 4 2b/b and nice size 3b/b house. Thanks for any help. I am afraid I can’t be objective as I am partial to the grat looks and great area. ou guys aren’t :}:} I donn’t think he’ll take 280,000 for it. I wouldn’t if I was him but I don’t know where to start my offers and work up and how far I’d go for this to cash flow. :help
$530k and it brings in $5500/month? You remember that great 2% rule Propertymanager uses…well this is 1%. How well do you think it will cashflow? Always stays 100% rented? IMPOSSIBLE! Ok so you save a few bucks on closing costs but are you going to make any money on this deal? Not likely. Just because someone will sell to you doesn’t mean its a good deal.
Let’s do a little math here:
Let’s say using expense figures of 50% of the gross (realistic) you have a NOI of $30,000/yr. $30k/530000 = 5.7% CAP
Let’s now say using expense figures of only 35% of the gross (more fantasy than reality) you have a NOI of $42,900/yr. $42900/530000 = 8.1% CAP
Even if I lie to myself about what I think the expenses should be it still looks bad even for a RETAIL deal. I can look on Loopnet right now and find TONS of better deals than that and most of those deals suck.
Apts found that i love
It might be a short romance when you start bleeding cash!
Mike
I totally agree with the poster above. 100% occupancy does not happen for a very long time, unless the rents are well below market. no repairs is bs. Every property needs repairs. This property is way overpriced.