8 unit in cincinnati - Posted by Jeff

Posted by E.Eka on January 08, 2004 at 12:13:01:

You’re probably going to need at least 20% down. If the owner can carry the 20% till you can refi, then you might have a deal. Also run the numbers. You’ll then know what you need to do next. Make sure they make sense. Also check out what the renting environment is currently like. You don’t want to pick up rentals when everyone is buying instead.

8 unit in cincinnati - Posted by Jeff

Posted by Jeff on January 07, 2004 at 15:23:29:

I resently lost my job and am wanting to get into Real Estate investing full time. I am looking for a way to purchase and finance a 8 unit building in Cincinnati.

Here is some of the info:

8 family with low rents and 5 garages not rented.) All
8 units have been remodeled in the last year with new cabinets, counters,flooring, & paint. All 8 are currently rented for $375/mo. (low to average for the area) and the 5 garages are not rented. He is asking $180,000. A conservative bank appraisal was 220,000.

Any advice? This looks like a great deal to me. What do you think?

Thanks for the help


Re: 8 unit in cincinnati - Posted by Sean

Posted by Sean on January 08, 2004 at 11:14:28:

I dunno, that’s a lot of cash for 3000 a month gross…180k mortgage is likely going to run you a good chunk of that… and you are going to have to go commercial to finance, which is higher rates, balloons etc etc, and because commercial you are likely looking at 20% down or owner holding note… Insurance will be much higher, taxes, utilities, maintenance… I dunno…

22.5k per unit for only 375 GROSS income per unit I personally would consider a tad slim. THat’s not a bad price per unit if they are in excellent shape, but the income side is a little soft, at least in my market. I don’t know the Cinci market, but I would assume its fairly similar to mine in Pittsburgh. And I can beat that rent vs unit cost ratio easily here.

I am not saying that this deal won’t cashflow… just I think personally I’d want to see better cashflow for the price… particularly if I were an absolute new investor. You can count on, vacancies being higher and taking longer to fill than you thought… repairs costing more than you thought… management to take more time than you thought etc etc etc…

Compare this property with others in the market, this might be a great deal for your market… and it does look like it should cashflow… However whether it is a “DEAL” or not is purely a matter of numbers… get the exact numbers of the operating costs on it, compare what you get on this per unit versus other properties for sale or sold in the market… and that will give you the indication if its worth it or not.

Re: 8 unit in cincinnati - Posted by Kim

Posted by Kim on January 07, 2004 at 19:02:41:

Hi Jeff

Listen to what JT is saying to you. I am also in Cincinnati and take heed as JT says to the for rent signs. I am a fan of multis but it is said that if one is getting started and does not have reserve funds that last thing one needs is tenants.

In this area Jeff you will find that JT is both generous and on target with his advice, heed it.


Maybe… maybe not… good deal - Posted by JT-IN

Posted by JT-IN on January 07, 2004 at 18:42:45:


First off, I am in Cincy, so I know the market fairly well… What you describe might be a decent deal… or could be not that great… The factors that would determine this would be … 1) Expenses, or what is left after expenses; 2) Location… it is likely inner city property; 3) Condition… Newly remodeled sounds good, but are the mechanicals good, or will you be spending $$$ on major issues outside of the cosmetics that you mentioned…?

What you have described is an investment that has a CAP rate of about 12… meaning that it is going to return 12% per annum, net cash flow, based on some educated assumptions; (40% expense ratio of gross income… this can and will vary). Obviously if the expenses were 50%, then the yield on the investment goes down and the desirability goes with it… 50% expense ratio is not out of the quyestion, if things like heat are being paid by landlord… so you must know exact expenses, not estimates.

Depending upon the location of the property, and the management intensity of the property, (greater management demand with low-end tenants, and lessor demand if it the property can attract a better grade of tenant), then this offering is just about average, of what can be bought in the marketplace, unless the management intensity is low… My guess is… that it isn’t.

The conservative Bank Appraisal theory isn’t one that I invest by… I would imagine that I could shoot holes in the appraisal large enough to drive a truck through… Just my guess here…

If you care to email me since I am local, I would be happy to offer you more specific advice on this property. These types of investments are not what I usually purchase… One last thing for thought here… In a recent conversation with several Bankers that I deal with, at two different institutions, I asked what they were experiencing with their personal portfolio of loan problems…? Both their answers were almost identical… “The only folks who are in trouble are thos with multifamily properties…”

Have you noticed all the “For Rent” signs up around town…? This may be part of the reasont that the units are for sale to begin with… if not specific to these units now, maybe they are spotting the trend… MF’s are the last thing that I would be gearing toward in this market… and I am speaking about Cincy area.

Just the way that I view things…


Re: 8 unit in cincinnati - Posted by GL(ON)

Posted by GL(ON) on January 07, 2004 at 16:02:39:

Looks like a great deal to me too. If I were in Cincinnati I would be real interested.

Re: 8 unit in cincinnati - Posted by Randy (SD)

Posted by Randy (SD) on January 07, 2004 at 16:01:59:

Some advice would be to get to the total operating expenses such as taxes, insurance and an income and operating expenses summary from the seller. With this information one could better analyze the overall cash flow of the property. His asking price in relation to the “bank appraisal” is good. One concern is that you can verify that appraisal, in other words don’t take the seller’s word for it!

Also you have described a little about the property and yourself, however you haven’t described anything about the seller. Is he willing to carry any secondary financing? Does he need all-cash? How motivated is he? Is the property listed in the MLS? If so how long?

Also you have said you lost your job, if you need to get anything other than owner financing, how is your credit? Do you have a down payment? I don’t mean to make this sound like the Spanish Inquisition but you see you ask for advice without giving enough information to make an informed decision.

Re: Maybe… maybe not… good deal - Posted by Jeff

Posted by Jeff on January 07, 2004 at 21:19:08:

I will know a lot more in a few days, but my agent says he believed that the tenants pay for electric and heat. The unit is located in Hartwell. Any more advice would be great. thanks.

Re: 8 unit in cincinnati - Posted by jeff

Posted by jeff on January 07, 2004 at 21:14:50:

He is willing to carry some back, but don’t know the details yet. The property is not listed on MLS. The investor called my agent and he then called me. My credit score is between 675-710. Does that help for advice??
Thanks for the help