Posted by Ronald * Starr(in No CA) on January 24, 2002 at 23:09:07:
The figure will vary from location to location in the country. And even depending upon the quality of the neighorhood and the renters.
For instance, if you bought in San Fran, you would expect the figure to be far different than in Lawton, OK. In Lawton, you can buy some duplexes, in poor locations, for $10K. In San Fran, you might be paying $500K for a duplex in a good location. The ratio of rents to prices will vary also.
You need to find out what figures are common for the type of property you are considering in your ocmmunity. Find out what other properties have sold for and what their rents are. When you find an average ratio of rents to purchase price, you can compare that to the rents of the subject property and project an average purchase price for that particular building.
Also, for properties of this size, if there are enough that have sold in the town in the last 6 months or year, you can use the sales prices as “comparables” for estimating what you might expect the selling value to be. You need to have similarity of neighborhood quality, rental amounts, age, size, etc to get a real solid figure.
Good InvestingRon Starr***