Multi Family

[Darrion Harris]

Good evening everyone. My name is Darrion and I'm newbie but I wanted to say thank you to all that has given me advice on real estate. I wanted to get thoughts on this property. It's a 2 multi family unit. The 1 st unit is a 4 bed 1 bath with a tenant paying 650 per month. The 2nd unit is 2 bed 1 bath and the tenant pays 450.00 per month. Repairs is 5 to 10 grand for upgrading the property. The seller tells me it's zoned as a 2 unit apartment building which was grandfathered in. The tenants are renting the units on a month to month basis. The asking price is 27000 or obo. My question is this a good deal to start out with

[Ned Carey]

@Darrion Harris on the surface it appears to be a good deal.

1100 month rent = $13,200 a year

X 50% expenses = $6,600 year

$6,600 / $37,000 = 17.8% cap rate

That means if you paid all cash you would get a 17.8% return on your money. This is very good.

However I see you are in Baltimore and those rents are low and the expenses could be more than 50%. That also assumes the repairs are a realistic number. I know Baltimore well and depending on the area this could be a high risk deal, especially for a new investor. Good luck - Ned