This post is not to offer an expert opinion on mf’s, and for that you should post on the Commercial Forum… You will get lots better specific advice in that arena.
What I will mention is that in a recent lunch meeting with a commercial banker that I do business with, we were discussing the bank status and the overall economy, etc… He mentioned that their default rate is rising… and it is all attributed to investors who own multi fam properties. This is driven by the vacancy rate, which is driven by the low interest rates and the ease at which almost anyone can qualify for mtg financing. The financial climate is making homeowners out of tenants, and therefore greatly affecting the marketplace.
Think long and hard about your decision… before making the leap. BTW, the numbers on the deal you ask about aren’t stellar. If the seller unloads the property at that price, they win… IMHO. If you neter the frey, make sure you use a sharp pencil and plan on worst case contingencies… which would lead you to a better buy…
Current status : 25 of 29 units 4 vacant are 2BR units.
Average Rents : 1BR rents average $325 2BR rents average $400
Average Gross income: $8225 (based on current occupancy)
Other Income: $150 (coin operated washers/dryers)
Unit Ammenities: stove, refrigerator, a/c (window - 1BR or centar air/heat 2BR) dining area, large closets, Free cable & Water
Complex Ammenities: pool, coin laundry, adequate tenant parking, cable
Expenses
Average Expenditures:
Water = $1400/mo average
Cable = $600/mo average
Gas = $9/mo average (gas laundry dryers only)
Electric = $80/mo average (exterior lighting & washers)
Advertising = $30/mo average
Phone = $50/mo average
Maintenance = $325/mo (current on-site maintenance getsfree 1BR rent for 40 hrs/mo labor)
Annual Taxes = $7900/yr. (average)
Congratulations on doing an excellent job of gathering information. Now all we need to do is make use of that information, plus some simple math, and analyse the profit potential of this deal.
How would you like to learn how to analyse any property and know if it is worth buying, in 2 minutes?
If you would, go to the archive search box at the top of the page and search for “GRM” and “cap rate”. One is the simple but crude method, the other is the sophisticated and detailed method.
Learn these simple rules and never be in doubt again, if a property is worth buying as an investment.
By the way if you read my posts on GRM and cap rate and still need help, present your answers on this board and I will check them for you.