apt. building purchase price/rental considerations

[pavulon]

For the land lords here, what might be a reasonable purchase price for two solid, adjoining 8-unit, 2BR, 1bath buildings in very good condition assuming $500/month/unit rent and full or nearly-full occupency in a blue collar town of fewer than 5,000 people?

Link: Commercial Property for sale by RE/MAX New Horizons Realty, LLC.

[Seahawk]

Way too many danglers:

- How much down?
- Condition of units, right down to every scrap of carpet, tile, etc.
- Other income?
- Tax posture (depreciation schedule)?
- Your tolerance for pain.
- Why are they selling?
- Etc.

[stomachmonkey]

Looks like at current asking price assuming no money down and cheap rate you'll need 10 of the 16 occupied to cover the note and taxes.

LP on a master meter so you are paying for hot water, heat. Don't' know price of LP but i imagine that's a at least 1 if not 2 units worth of rent per month.

Who will maintain the place? What's a Super going to cost?

FWIW the place looks clean but does not look like it's at or near full occupancy and needs updating.

[McLovin]

That's only $48,000 in gross rents per year, at full occupancy.

$660K+ seems like way, way too much for that.

My guess, without knowing the area at all, so just a guess, is that something like that would sell for/be worth around 8X the gross rent. That would be around $384K. I can't imagine it would be more than 10X the gross, which would be $480K. I don't think there are many small blue collar towns in the US where apts are going for 10X the gross.

[stomachmonkey]

Originally Posted by McLovin

That's only $48,000 in gross rents per year, at full occupancy.

$660K+ seems like way, way too much for that.

My guess, without knowing the area at all, so just a guess, is that something like that would sell for/be worth around 8X the gross rent. That would be around $384K. I can't imagine it would be more than 10X the gross, which would be $480K. I don't think there are many small blue collar towns in the US where apts are going for 10X the gross.

Two 8 unit buildings so 16 units total, $96K gross.

[McLovin]

Ah, got it, didn't see that. Seemed way out of whack.

So the asking is around 7X gross.

[Seahawk]

Originally Posted by McLovin

Ah, got it, didn't see that. Seemed way out of whack.

So the asking is around 7X gross.

I made the same initial mistake.

This thread cries business plan!

Looks interesting, however.

[turbo6bar]

$96k gross minus 30% for expenses

With cap rate of 10, $672k, for starters.

What are the expenses? Have rents been raised regularly or recently? Any room for upgrades and rent increase? Any deferred maintenance? Is the tenant pool stable? Population stable? Employment stable?

"Reasonable purchase price" is dependent on so many factors.
good luck, jurgen

[john70t]

For pricing, I've heard to ballpark at 100x monthly rent and go from there.

[Soterik]

I showed this to my wife (this is all she does all day long....).

9 cap, probably worth about $640, about 40K per unit.

Have you looked at any comps?

Good luck financing it...., it's too small for fannie, it will probably have to be a local bank.

Eric