Need Help on Putting this Deal Together!! - Posted by Scott E. Phillips

Posted by Peil on July 06, 2002 at 16:38:10:

lets look at this. you put 50k down and finance 400K over 30 years at 7.5% thats monthly payments of 2796.80 a month or $33561.60 a year. so if your income is 39660 per year - 33561.60 = 6098.40 a year is what you make on that 50K, and dont forget to subtract all the other expenses, taxes, insurance, power, (are you planning to sit in the office all day and run it yourself?) if not then employee’s pay. Even if you find someone to work for 5 bucks an hour that going to come out to 10K a year. This sounds like a bad deal to me if your trying to make the property pay for itself. Good luck

Need Help on Putting this Deal Together!! - Posted by Scott E. Phillips

Posted by Scott E. Phillips on July 06, 2002 at 14:49:33:

OK, Here is what I am looking at…and yes I know this is a business purchase and not a real estate purchase, but I view it as BOTH!

91 unit storage facility plus land to develop 2 more buildings. Breakdown is as follows:

16 units 5x10 rent for $25/mo.
16 units 10x10 rent for $35/mo.
54 units 10x15 rent for $45/mo.
5 units 10x32 rent for $65/mo.

Vacancy rate over last 3 to 5 years has been less than 10% and right now is over 90% rented.

Total rents at approx. 90% rented should equal $3305 or so in Monthly revenue.

Owner will not sell unless she finances it herself at $35 to $50 down and remainder financed at 30 years at decent interest rate (have not pinned that part down yet). Total purchase price is $450,000.

My problems are:
(1) is this a good purchase based on the numbers?
(2) Based on poor credit history (low wages, financial problems in past), how do I borrow the down payment to get into the deal? I have just formed an L.L.C. for real estate investment and business investment purposes.

I would really appreciate any help anyone can give.


Scott E. Phillips
TeleComp Media, L.L.C.

Yikes! - Posted by Cal,Balto

Posted by Cal,Balto on July 09, 2002 at 21:23:26:

Not a good deal. Purchase price should be based on NOI and what kind of return your looking for. Start slow and learn how the numbers work. Real estate investment is not about monthly cash flow, it is about long term return on your money. For instance you could have a property that brings you $200 a month for 2 years and then you have to replace the furnace at a cost of $4800.00. You just broke even with 2 years worth of work invested. Do extensive research on buying and holding propery. A project like that could set you back 5 years if not more. Good luck and happy investing.