Why won't people tell the truth in their ads?

[Frank Adams]

Man I get so PO'd when I read Realtor and seller ads, either in the paper or on Craigslist. I just saw another glaring example this mornings or an agent/investor selling 4 rental units with the following (paraphrased) ad;

"Great investment property with 8% CAP RATE". Investor selling 4 rentals with with $900/ month rent on each. Sales price of $540,000. This is a great cap rate of 8%!

First off in the body he had written that 2 of the units were rented for $50 less per month "because the tenants had been there a long time" So right there the 8% isn't right for that sales price-it would have to $15K less for it make 8%.

In the second place he's using GROSS numbers! And this is in TX where you can figure 3% for property tax and another 3/4% for a Fire and EC policy. So figure at least $4K/year for tax and insurance/per unit. So taking the NET rent per unit (before vacancies and repairs), down to $6800. The price that would bring at an 8% cap rate is only $85K, a long way from the $135K the buyer is asking.

Be careful out there noobies!

all cash