10 unit property numbers, any holes???? - Posted by Rachael

Posted by Joe Eckburg on October 06, 2003 at 12:16:00:

Management fee? Vacancy/deadbeat factor? Deferred Maintenance besides cosmetics? Snow removal/lawn care?

Taxes and insurance based on your purchase price and your insurance agent’s estimate?

You are paying 25K per unit, for units that rent for 360/month. Is this acceptable to you?

Ask for the current owner’s P & L Statement.
Calculate your NOI (Income - All Expenses).
Use a cap rate you feel comfortable with. I wouldn’t do this unless it was 11 or 12%
Based on your numbers, 43200 - 2800 - 1600 - 5400 = $33,400. I would include 10% management, 10% vacancy/deadbeat, so the number would be lowered to $26,560. Based on a 12% cap rate, Value = $221,333.

I hope this helps.


10 unit property numbers, any holes??? - Posted by Rachael

Posted by Rachael on October 05, 2003 at 23:32:24:

Hey Guys,

Please look at these numbers, any holes that you can see or anything else that we need to do? Thanks so much for your help!!!

10 units
$43,200 yearly income (should increase up to $60,000)
$26,004 yearly mortgage, taxes($2,800) and insurance(1600)
$5,400 yearly water/gas expenses

The building has a new roof (5 yrs) and new gas hot water heater (1 yr). We are predicting to have a $623 cash flow each month before rents are increased and no other expenses. Of this, we will hold out $500 mo in an expense account for incidentals. After account reaches $10,000, additional funds will be placed against mortgage. So,will have a real cash flow of $123/mo. With rent increases, we expect a real cash flow of $1523 each month. We will also be receiving at time of closing about $15,000 to make cosmetic repairs with. The building has been appraised for $389,000. We are negotiated down to $250,000.

We still need to have a codes inspector come out and do an indepth inspection and the building professionally inspected. Have we left any blaring numbers out???