Carol gave good basic advice. Here’s a couple more thoughts. Before you spend One hundred thousand dollars, spend fifteen on a book on buying apartments. Don’t trust the numbers the seller gives you. Look carefully at what repairs the seller hasn’t done. Get at least two years rental records including rental applications and credit checks. Look at the kind of tenants living there - Are they the kind of people you want to deal with? Will the place attract better? If not what must be done and what will it cost you? Make your offer “subject to professional inspection and ability to obtain suitable financing.” Don’t get excited. Good luck.
Posted by Dan in MS on March 27, 2000 at 19:04:50:
I found a 5-unit apartment complex that is listed for $113,000. It consists of 4-1br/1ba apts and 1-2br/1ba apt.
The 1-br apts rent for $300 a month and the 2-br apt rents for $375. I haven’t run any cash flow analysis yet, but does anyone know if this is a decent cash flow generator assuming the $113,000 is FMV. It is not listed with a realtor, so there could be some negotiations in the price. What kind of cash flow could be generated and what, if any, would be a good price to offer on this property?
you need to learn to figure these things out before you even start LOOKING or THINKING about acquiring property. Best posted on the main news group with general RE qtns, let me just give you some guidelines…
Tote up your annual gross rents… minus a reasonable vacancy factor.
Figure all expenses except debt service (taxes, trash, yard,utilities, maintenance, pest control, etc) and add a ‘fudge factor’ to be safe.
Subtract the second figure from the first, and that gives you some idea of what kind of debt service your property can support.
This is very basic, but a good starting point.
Carol