Posted by JimFitz on September 23, 2003 at 18:49:25:
What state are you doing this deal in? Also, I agree that the CAP can not exceed the interest rate.
I new can someone help on this deal i’m working on - Posted by MartysGirl
Posted by MartysGirl on September 23, 2003 at 09:28:23:
Hello
I’m looking at a 8-unit condo. they are asking 35K each but I think I could buy all eight at 30K each. Monthly income is 3112.00 with ONLY seven rented. I could ask more for the last condo(it has new carpet and paint). Tax are 580 on three and 562 on Five. The HOA is 96.00 on 6 and 100.00 on two. The apartments are already managed and ask 10 %.
Do you guys think this is a good deal? I’m not sure… Should I look for something else?
Re: I new can - Posted by eric-fl
Posted by eric-fl on September 23, 2003 at 11:04:44:
How do you plan to finance this? It’s an important question, because if your cap rate is lower than your interest rate, the property will not cash flow. Going on the numbers you have, your annual GOI, with 7 units rented, is $37344. Let’s take 35% off for maintenance and management, to arrive at an NOI of $24273. Divide that by the acquisition price of $240000, and we arrive at a cap rate of 10%. Not bad, as long as your cost of capital doesn’t exceed it. You might get more in-depth input on the commercial board.