Buying a 6 unit

[Mark Malevskis]

Hi everyone, 

I'm on the process of buying a six unit apartment in Addison il dupage county

Sales price is 450k 5 2 units and 1 1 unit 

Rents in the area are 850 for 2 beds and 750 for one bed.  Building noi is around 35k

Whoops you guys say I'm making a good investment or I could put my twenty percent to work better around my area? 

Any feedback is great 

Mark

[Joel Owens]

Remember you will hear all kinds of arguments from the seller. They will say they just redid this and that etc. and expenses are only 35%.

They say this to justify a higher number.

What they aren't saying that if your time horizon as the buyer is a 10 year hold before selling then costs might look like this.

Year 1- 35%, 2 - 38%, 3- 43%, 4- 47%, 5- 50%, 6 - 53% etc.

35% is unrealistic but the point is over the 10 year spread your average expenses will be much higher than what the seller is quoting plus they want you to pay a low expense price today. You will end up overpaying and might cash flow a little then in the future years the repairs really start rolling in and you have a loser of a property. Where is the seller?? Sitting on the beach telling friends about how they dropped one on a buyer for a great price.

Don't be the investor that overpays and becomes another statistic. I would rather not buy at all than deploy my capital into a marginal or bad deal.