Multiple Rental properties in group package

[Gary Tommeraasen]

I recently found a landlord that is selling 17 rental properties for $500,000 with owner financing. The owner wants 20% down so $100k and will carry the $400k. I'm working on getting more details from him. He did say they are 100% occupied right now.

I'm looking for advice on how to proceed on this and I know what the monthly rental payments are in the area. They should be around $500/mo depending on the property.

Thanks in advance.

[Kellie Holly-Wood]

What type of interest rate is the owner giving you?

You want to find out what your annual net operating income is. To do this take the number of units x monthly rent x 12. So if you have 17 units at $500 x 12 months would equal $102,000. Now you need to subtract your annual expenses. A good rule of thumb is 50% of your income. In this case it would be $51,000.

Now, let's say you are getting a 7% interest rate from the owner on a 30 year loan, your monthly payment would be $2661 or $31,932.

So, your net income after debt service would be $19,000.

Your cap rate would be 3.8%. That's your net income divided by the purchase price. But that is all hypothetical on your interest rate.

If he's asking $500,000 try offering a lower price to increase your cap rate. Find out why he wants to sell the property. T

And although they are 100% occupied now, make sure to account for vacancy. Probably between 5-10%.

I hope this helps a little....