Posted by CarolFL on May 28, 1999 at 06:41:31:
Help us out here - when you say $7000 expenses annually , what is y’all’s situation on taxes, insurance, and what does the $7k include?
Is this to hold or flip?
What will money cost you down under?
Is the $580/mo “market” rate?
What is the vacancy rate for the area generally?
We have extremely low vacancy - paint or no… but that’s in our little corner of the world.
When we look at a property like this we start out figuring expenses will run us about 40-45% of gross rents… including management, vacancy, etc. So we look to 55% for debt service and cash flow max. If it looks like it might work, we then pin it down more closely.
Our offers are made on the property AS IS, not what it could be. AFter all, the owner is selling it, in your case, mostly empty, and by his own admission needing work to be rentable.
We have an offer being negotiated now for 4 units, tax assessed at $108k, which we have now at $68k because they are mostly empty and need some work. (lower rents than yours). On another (10 units), we have discussed with the seller a 1 yr l/o so we can rehab and get the property ‘financeable’.
Lisa, I’ve erased the “expert” part from the subject line, but this may get the ball rolling. Good luck!