Posted by GL(ON) on December 17, 2002 at 19:19:47:
You now have enough knowlege and experience to write your own course LOL. No kidding, most of the well known “gurus” had no more than 2 years experience when they started teaching. And had read 1 book LOL.
The fact that you appreciate my stuff makes you a “genius”.
buying multiunit - Posted by franklin
Posted by franklin on December 14, 2002 at 14:37:25:
Preparing to write Letter of Intent to buy 10 unit building,
The detail, all units rent out for 650mo * 10
Her asking price is 700,000 but willing to hold paper or a mortgage.
I believe i can increase the rents min. $25/unit or more
also could include a washer/dyer of 50 extra cashflow.
6500 gross income mo.
325 5% vancany rate
6175 collectable income
5200 debt service (mortgage of 700,000 @ 6%)
975 mo. cashflow
Question what could i do to increase the cashflow or what can i do to decrease the debt service…
ANY SUGGESTIONS OR ADVICE WILL BE HELPFUL… What would you do if you were in my shoes?
Great Success… Franklin
Re: buying multiunit - Posted by M. Martin
Posted by M. Martin on December 15, 2002 at 23:56:23:
Using 675 rent and 40% expenses I see a 6% cap rate, 9 GRM, 0.9 debt coverage ratio. IF you don’t know what these mean please look them up. You can only raise rents so high since they are market driven, you need to concentrate on purchase price. This looks attractive at around 470k, 100% leveraged. You will have a large alligator on your hands otherwise.
Re: buying multiunit - Posted by GL(ON)
Posted by GL(ON) on December 14, 2002 at 16:04:43:
I used to think I knew something about buildings of this type since I have been buying them for 30 years. Then I found out I don’t. I found this out by posting some advice to this board, and being flamed by people who may or may not be real estate investors.
If you are interested in my bogus, worthless opinions, and the reason they won’t work and I have just been lucky all these years, do an archive search for “GRM”. I’m not going into it again, I don’t need the bull roar.
Re: buying multiunit - Posted by phil fernandez
Posted by phil fernandez on December 14, 2002 at 15:04:34:
How about property taxes, water/ sewer charges, rubbish and snow removal, lawn care, insurance, management, repairs and reserves for replacements, advertizing. You don’t mention any of these expenses.
Your calculated $975/mo cashflow will not exist after accounting for all of your operating expenses. And you will actually be running a huge negative cashflow.
No deal here at $700,000.
Thanks M Martin you nailed it.NT - Posted by GL(ON)
Posted by GL(ON) on December 16, 2002 at 10:35:25:
OK
Re: Thanks M Martin you nailed it.NT - Posted by M. Martin
Posted by M. Martin on December 16, 2002 at 13:32:08:
Thank you.
It is good to hear that from someone with your experience. I am a newbie but I have been doing my homework. I think a lot of new investors get too caught up in buying an investment property for 0 down and don’t take the time to determine if it is worth buying at all. I bought my first rental for nothing down and actually took cash out at closing. I knew it was a good deal before I made an offer. It would still have been a great investment if I needed 25% down. Buying with nothing down made a good deal better, it can’t turn a skinny deal into a good one. I think some of the infomercial gurus are getting a bad rap also. I just reread info from Sheets and Robert Allen. While some of the techniques for buying may be suspect, they both have several chapters on how to analyze an investment property. They accurately teach market anaylsis, How to accurately run a cash flow (30% to 50% expenses depending on type of property), vacancies, NOI, ROI, Cap rates, GRM, Debt coverage ratio,etc. I knew none of this before I read these books and courses. I think some newbies are skipping these chapters and going straight to the 0 down techniques.
So far my largest investment is a 3 unit but I plan to invest in larger buildings. When I run across a potential deal I will post here with numbers. I welcome your comments.