Posted by rachel on December 19, 1998 at 18:47:52:
With all four units rented for 600.00 p/m and expenses being only 400.00. The cap rate @10% value comes out to be $200,000.00. If there is no offer yet and If I were you even thoug you feel this person is a friend or what ever, I would still put down on paper an offer for less. You are not going to hurt the other persons feelings. When it comes to business, he will either take it or not. He will still be your friend. Dont be so fast to just get the deal, get it in your favor. You never know, you may help this person get a good deal on his venture into the next one.
newbie Q: how to appraise? - Posted by marc lamphier
Posted by marc lamphier on December 19, 1998 at 12:33:36:
I am thinking of buying the apartment house I now live in (4-unit). Who do I consult to figure out what it is worth? This is my first time, so I want someone experienced to do it for me. Do I pay for a full-blown appraisal (couple $100 bucks) or pay a local realtor $100 to give me an estimate? I know the bank will want an appraisal as well.
Posted by Rachel on December 19, 1998 at 14:15:46:
Another angle is to find out what all the figures are, expenses vs rents and talk to someone who can help you figure out what the CAP RATE is to also help determine value.
First thing you have to do is get friendly with a good appraiser. Ask him if he’ll do a pencil search for the property that you are looking for. This is a non-committed “estimate” of what that property is worth, looking at no factors or contingencies. You can also get a real estate agent to do “comps” on the area. You might want to go in and tell them that you are interested in looking for listings in that area, and would like to also find out how those listings compare to the actual Closed Sales in the area. These will be your “comps”.
If you like what they say, then you would be well off to do all the other work, such as tying up the property (well below market value, of course), setting up the financing, if any, getting in touch with the mortgage brokers, title (closing) companies, and making sure that the deal is going to fly. After you have this information, get the formal appraisal done, and get the deal done!
Re: newbie Q: how to appraise? - Posted by marc lamphier
Posted by marc lamphier on December 19, 1998 at 18:14:12:
I have a rough idea of these. My landlord has mentioned 180K price, there are 4 apartments, rent $600 - $700/apt. I will continue to live here, and my landlord will become my tenant. He is looking to cash out and leverage up to a bigger building. He’s a friend and I’m not interested in getting him to sell too low, just want fair market price.