Posted by JPiper on April 15, 1999 at 11:51:53:
I would be working with an estimated NOI of $4180 per month. This reflects a 5% vacancy and bad debt factor and 40% estimated expenses including set asides for deferred maintenance.
You say that payments on the existing first are $4200, and the interest rate is 9 ½%. What you don’t say is whether this payment is PI?or whether it includes perhaps taxes and/or insurance. Or perhaps it is amortized over a shorter period than 30 years. If however it does not include taxes and insurance, your seller is not experiencing positive cash flow?.he may just think he is because he is not reflecting set asides for future deferred maintenance. If the payment includes taxes and/or insurance then it’s a different matter.
On the surface I’m not seeing a spectacular deal here. But if your goal is to put some cash in something that pays an acceptable rate of return, then this may be something to pursue.