I have ran the numbers and this seems like a pretty decent deal. What do you guys think? Any advice would be much appreciated.
What do the numbers tell you?
You’ve got a ballpark rental income figure and purchase price… a start.
What about expenses?
-Utilities
-Property Management (Residential Manager, Corporate Management, or DIY?)
-Taxes
-Insurance
-Maintenance
-Debt Coverage (Mortgage)
On site laundry is always good for additional income, how much does that pull in anually?
Is the property easily accessible, along a main road or highway, or do you have to twist and turn on multiple roads to get there?
Is there enough parking for all of your tenants, two spaces per unit is usually the rule of thumb.
Does the capitalization rate, cash on cash return, and debt coverage ratio work well together?
How is the local market? Any big companies coming into the area? Any big layoffs coming up or maybe occured already?
There are many questions to ask before diving into a property seriously. These are items you’ll will have to find out from speaking with the current owner, talking to commerical realtors and brokers in the area (get to know the great ones and stick with them!) local tax asessor’s office, city officials are a great resource as well!
Please don’t take my post as trying to belittle you or make you feel inferior, I am no real estate investment master or guru, only a student who has learned to look at the big picture as well as the small details before a purchase. Contact the current owner and see what the expenses are and you can post them here, we’re here to help!
specialk asks a lot of the right questions – ones to which you will need to get an answer…
Based on the skeletal information provided and not really knowing anything much about Spokane (I DID see the ‘city’s finest’ on an espisode of “Cops” the other night!), this appears to be a very thin deal. The rents are only 0.94% of the sales price…do NOT base your decision on “current monthly rents are $5430 but could be $5850…” if that’s really the case, they already SHOULD be. Never base your decisions on the seller’s ‘pro forma’ information…!
My two cents.
Keith
You really need to get and validate all of the expenses/incomes.