Re: Advice on 32 unit complex - Posted by Laura Newman
Posted by Laura Newman on November 05, 1998 at 21:20:13:
When you look at a commercial deal like this, you can use the same formula the banks are going to use as a rule of thumb.
Take Gross Annual Income $173,280
x 90% (use 10% vacancy)
less actual expenses ?
=NOI (Net Op. Income)?
x .8333 (ROI of 1.2%)
= Annual mortgage P&I
and since multi units are going at fixed rates of about 8.75% right now, you can use that amount to tell you what they will loan you on the property.
If the Asking price is more than 15% above that, it may not be a deal. Other factors apply. But this is all I can say about figuring direct numbers.
Hope that helped.