Novice Investor - Can you help me validate this deal?

Novice Investor - Can you help me validate this deal?

Jersey City, NJ · Member since 2017 · 1 post · 0 votes

Hey BiggerPockets, I'm a novice investor hoping for your thoughts (validation?) on a potential investment.  For context, I own a couple of condos that generate a decent net profit of ~$375/month each.  Now, I'm making the jump to an 8-fam.  

Here are basic parameters of the deal... 

  • Location: CT
  • Size:  8 residential units (2 bed / 1 bath; 988 sq. feet each)
  • Purchase Price:  ~$66k per door
  • Other notes:  Each unit features a private deck and parking, kitchens are slightly dated but overall these are easy rents in a stable area; building is brick exterior, sturdy, and well-taken care for (seller spent $xx,xxx on a new roof, upkeep, etc. over last several years)

Without getting into too much detail, the P&L provided shows net profit of ~$250/door. However, rents are below market and expenses can be tightened up.  Brought up to market rents and a few tweaks, I'm confident the building (at full occupancy) can realistically net ~$2,500/month plus or minus depending on repairs and maintenance.

What do you think?  The expected per door profit is hovering around $300 which seems a bit low — but perhaps that's just my skewed perspective having experience with single family / condo investments.  

BP, is this a good deal?

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  • Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    8y

    Not enough info.  What rents do you expect?  What financing terms are you getting?

  • Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    Without going into too much detail it really depends on the area, if it is uncommon in the area then yes, if it is easy to find in another property then no.

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