Valuing a duplex... - Posted by Fran

Posted by William Bronchick on May 19, 2000 at 09:51:15:

With low-end mutlifamily, you need to figure on 1/2 of the gross rent going to every BUT debt service. Thus, $4600/year will go to taxes, insurance, utilities, management, legal, repairs, etc. That leaves $4600/year for debt service - p&i payments. On a 15 year land contract @10%, your p&I payment would be about $350/month or $4200/year. So, at worst, you would be looking at break-even with nothing invested and paid off in 15 years.

Unless the place is a real disaster or in an area that is unpopulated, it looks good on paper. Capitalization means nothing, but based no my figures, I see about 13% rate.

If he wants money down (I doubt it), offer to do repairs or improvements in lieu of a down payment.

Valuing a duplex… - Posted by Fran

Posted by Fran on May 18, 2000 at 14:01:23:

I have a question regarding a call I got…

Former broker, had property here, retired moved to FL, and has one piece left he wants to unload.

Before he left he did a ton of interior renovations, new carpet, paint, appliances, etc. It needs some exterior work, at an estimated cost of 7K.

Here’s the current numbers:
Gross yearly rent: $9240/yr. ($385212)
Taxes: $711/yr.
Water/sewer (he pays): $900/yr.
His asking price: $34K

My gut tells me the bottom apartment will rent for a bit more, because it has the right to the basement and the laundry hookups, etc…

Once i do the repairs, etc., what should I be expecting to put aside for deferred maintenance, vacancies, etc.

Can anyone run me through the formulas to analize this deal (cap rate, NOI, etc.)



PS–He was willing to carry back, or discuss “creative financing”, so any suggestions in that vain would be helpful.