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Updated almost 12 years ago,

User Stats

23
Posts
2
Votes
Bryan Weller
  • Clarksville, TN
2
Votes |
23
Posts

When to throw historical numbers out the window

Bryan Weller
  • Clarksville, TN
Posted

This is kind of a theoretical question for fun.

I was looking around at properties, trying to learn, when I saw a fourplex that was somewhat interesting. Personally, I think they are asking way too much for it, but let's say for the sake of argument that it could be purchased at the right price and all the numbers historically look good on the investment, meaning good NOI, low vacancy rate, reasonable costs of ownership and so on. You do all the calculations and it looks good....

however....

this particular property is tucked away in a neighborhood off of ABC Street (that's what we'll call it). ABC is a connector between two parts of town, is well traveled and is nothing but tons of neighborhoods branching off of it with a nice elementary school in the middle. The problem is that facing directly to the road is 10 or 11 brand new fourplexes that just got built or are under construction. These are newer, nicer looking and have way more visibility than the older one for sale.

I have zero interest in buying the property, but I'm interested in responses for learning purposes. How much could you really trust the historical data knowing that they don't reflect the new competition?