Posted by Mike on February 23, 2004 at 16:53:15:
This is a potential first deal for me and I’m trying not to get too starry eyed. I located a five unit apartment building in a decent but not ritzy although improving area. The building does not appear from my untrained eye to need any major repairs (but I will certainly enlist a professional to go over it more carefully). I need to confirm the rent and expense figures but it breaks down as follows:
Asking price $239,900
4 - 2 BR units rent @ $600
1 - 3 BR unit rent @ $750
(gross rental income $37,800)
Approximate expenses including 5% vacancy: 9,690
Based on thesefigures, the NOI should be about $28,110. Does anyone think I’m missing something here?
If the above passes the sniff test, the financing presents the next hurdle. I’d like to finance as much as possible. Is it advisable/possible to borrow 100% on a rental? What is the best way to finance something like this? Owner carry back may be an option.
Is there anything about obtaining a loan on a five unit apartment building that differs from, say, a duplex? (i.e. higher rates, credit score, down payment)?
Thank you to anyone who had the patience to suffer through my ramblings and or cared to respond.