Updated about 9 years ago on . Most recent reply
Question about a Deal.
I am a new investor from California. I am looking at a 9 unit apartment building which is in another state. The asking price for the building is $125K. Total gross rent for the property is $2800. It currently has 100% occupancy. I called few of local management company they all say it is in a under-developed part of the town. Some homes there are boarded up etc. I figured that when I saw the property price. But property is in fairly good condition according to the photos (I still need to visit the site personally). Owner sends me a bank statement to show the proof of rent from tenents and also sent me water bills and trash bills from the city. But he does not have any lease agreement or any documents about tenants. He says tenents are on month to month lease and he doesn't need it.
I worked some numbers and I got 14% Cap Rate, 26% Cash on Cash. My question is how can I make sure this is a good long term investment property to own? What would be my next step if I want to proceed with the purchase. Should I get under contract before visiting the location or after? What would you do in this situation? Thank you for any guidance.