I came acrossed a 24 plex for sale in my town here for $750,000.
I am assuming i can get it for $500,000. But Here is the info on it
Princ. & Interest @ 8.5% = $3900
Taxes @ $13,500 per year or $1125 per month
Insurance @ $300 per month ( I have no clue on this, maybe high, or lower)
Total = $5325 per month out
18 - 2Br units @ $365 ea. or $6,570 per month
6 - 1Br units @ $345 ea. or $2070 per month
Total = $8640 per month in Profit of $3,315
With this said, the realtor told me there is a 10-20% vacancy rate.
So $8,640 * 20% = $1,728 loss
for a total of $6,912 in for a profit of $1587 per month
I would also raise rent by $20per month since this is under market
what i am needing to know is if i am missing anything. I am going to do my own management. I can do most repair work myself, as i do rehab houses also. My biggest problem is trying to get into this with nothing down. Can it be done? I have good credit about 670-700 score. a decent paying job. 1 other rental house, a house that iam rehabbing to be sold hopefully in the next month or two for a $20,000 profit. Can anybody give me any advice? am i heading for too deep of water here? Is the $1,600 profit @ 20% vacancy too little for this complex? if anybody can help me on financing and other issues, please let me know as i would like to possibly go through with this.
Maintenance ($25-50 a month per unit), even if you manage yourself
Management (8 - 10%), even if you manage yourself
8.5% sounds a little high but it might not be for a blended rate and a commercial loan…have you broached the suject of owner financing with the seller? Also, I have heard a good many commercial loans are assumable. That bears checking out also.
Carlos, is the 1200 what you are figuring per month? or for a year?..like i also said, i wouldnt pay more than $500,000 for it, but the next hurdle is how am i to attain financing for this since its a commercial property. Since i dont have anything to put down, im probably not going to be able to go through with it…i’d love to do it though cuz i think it will generate a very positive income
also carlos, How did you figured the net income to only be 68,000? If i figue a 20% vacancy, which is 5 units…assuming they are all 2 br units, that is 13* 365 = 4,745 plus 1 br = 6*345 = 2,070 for a total of 6,815 per month * 12 months =$81,780 p/year
Princ. & Interest @ 8.5% = $3900
Taxes @ $13,500 per year or $1125 per month
Insurance @ $300 per month ( I have no clue on this, maybe high, or lower)
Total = $5325 per month out
Gross operating income is $82944/year after deduct 20% vacancy.
If above data is correct, then the operating expense is only ($5325-$3900) x 12 = $17100/Year.,It is only about 20% of the gross operation income, which is considerably low comparing to normal ratio. If you can keep expense this low, then it will be a winner. I would do more DD on the expense data. The breakeven point is 45% operating expense to income ratio.
Is this 24-plex in your local? Any planning improvement/fixer expense after the purchase?
Remember again, this is with no management or utilities as explained by Ted.
I found it very difficult to get started as well in Multi-Units with no cash.
So I started with a condo and single family first. next month I will buy my 2-5 family house. there is a course that I took by Dave Lindahl great course helped with numbers and details, however I dont have that much cash right now to make it profitable.
Carlos, You said you started witha condo. how much profit do you make per month off of that after all expenses? I know alot of people are happy with $100 on SFH. I let a 4-plex go a few months ago that would of profited about $250-350 per month…actually i could probably get that still if i wanted to pursue it.
i have 1 SFH that i rent out and profit $25 per month after everything. This is only because i refi. my credit cards so they could be tax deductible and somebody else could pay for my idiotic college mistakes (Spent lot of time at the bar). I also own another house that i am rehabbing. I should have this done in 2 weeks and hoping for a $20,000 profit. I am also looking at building a spec house in a subdivision that we just got done doing (I am a civil engineering technician). I will see how these spec houses go and maybe start doing a few of these every year.