Input of a 4 family apartment - Posted by joe hoffman

Posted by Clair-MO on January 11, 2004 at 11:18:13:

Joe, Here is what I would do in negotiating on the 4-Plex that you described:

  1. Never pay the asking price unless it is far below the Fair Market Value. I would offer 20% below the asking price of $136,000 rather than $142,560.
  2. Do either a lease option or owner financing on the property. I wouldn’t pay any down payment per say. I would explain to the owner “It is according to my business policy…no down payment or lease option fee for I will be using this money to market the property to get the very best tenants and fix-up cost for any damages.”
  3. I would ask the seller what their monthly mortgage payments are and try to negotiate a mutual agreement of you paying their monthly mortgage payment as your monthly rent payment to the seller.
  4. Ask the sellers for their coupon book so you can send the payments directly to the bank. Listen, you are solving a problem the seller has based on their needs not their wants.
  5. If the 4-Plex is listed with an agent, I will negotiate with the agent on the asking price just as I would with the seller being present. Now, what about paying the agent’s commission if you are doing a lease option or owner use the lease option fee or the down payment to pay part of the agent’s commission and explain to the agent that the other part of their commission will be paid on monthly installments to him/her/to their Broker. Give them a promissory note secured by a mortgage on the property.
  6. Look over your offer and cut any unnecessary expenses that you will be paying out of the positive cash flow. If you don’t get at least 200 to 300 positive cash flow don’t do it! It can be the monthly rents will be more than 200 to 300 dollars. Just my thoughts!

Input of a 4 family apartment - Posted by joe hoffman

Posted by joe hoffman on January 11, 2004 at 08:40:44:

Could you give me some feed back on a 4-family apartment I am currently thinking about buying. Here is what I offered for the property:

Gross Rent: 1935/month
Vacancy(5%) 97/month
Net Rent: 1838/month

Advertising: 16/month
Main Fee: 182/month
Prop. Mang: 128/month
Heat/Gas: 183/month
Water: 125/month
Electric: 0/month
Insurance: 52/month
Taxes: 260/month

Total 947/month
NOI 891/month

I offered 142,560.00 on a ROI of 7.5%. He was asking 170,000.00. The comps came back at 165-168,000.00. Do you think my calculations are correct. Is this offer sound?


Re: Input of a 4 family apartment - Posted by E.Eka

Posted by E.Eka on January 12, 2004 at 11:50:19:

Unless you’re buying the apartment out right with cash, you forgot to include the mortgage payment amount.