Posted by tony b columbus, ohio on October 14, 2003 at 15:01:18:
I use a simple calculation to determine if multifamily is worth my time. take the ask price over the qross rent. So 160/22=7. Now to look at this another way consider a duplex for sale for 50k that generates 12k per year in rent. 50/12=4.1 It is likely that this deal will cashflow well and worth further consideration. Another way to look at it, I want more than 20% of the ask to be generated in gross rent per year. For me, i want to make money on the buy, make money on the cashflow, and make money on the sell.
Thus, a 160/22 does not get me excited at all.
Does that help?