Duplex description question

[Juan Alvarez]

Hello all,

I have a few questions. I am currently reading a description on triplex that has been recently made available. I like to see what’s for sale every now and then as I am still in the process of saving enough money to buy my first property.

Anyway, The description says "Performa CAP rate over 9%". What exactly does that mean?

The property is only 25% occupied, but he says that all bills are paid by the owner. That only means that for the current tenant correct? So if a new tenant were to move in, he would have to by the new terms since a lease is being signed?

He also says a survey is not available? What does that mean exactly.

Thank you so much in advance and I apologize for my arrogance. Like I said it’s been a tough road trying to save money enough money to get in this game comfortably so I’m trying to learn every thing I can.

[Martin Vehlow]

Hey @Juan Alvarez, Pro Forma CAP rate is his projection of what returns the triplex would provide IF it was fully occupied and at market rents. Always run your own numbers (underwriting) because there are frequently mistakes and sometimes these numbers are inflated to make the investment look better to a casual observer.

Not sure what your question is for the next paragraph.

A survey is performed by a professional land surveyor which tells you the dimensions of the lot and if there are any encumbrances or issue with the placement of improvements on the lot. You'll want to have a survey done before purchasing as part of your own due diligence.

Keep educating yourself, nothing wrong with asking, there's tons of free info here on BP and on the podcast!