8-plex - Should I pull the trigger?

Question

Hello. Here are some short specs on a possible property I am considering.  Please let me know what you think.

• 8-plex in a lower-income neighborhood, no issues keeping it rented.
• New elec. and plumbing + some other upgrades like a newer water heater.
• Just passed 3-yr borough inspections
• Tenants pay electric (all metered out), Landlord pays utilities.
• Gross Rent/Year is around $55,000 ($4583/mo; $572/unit)
• One unit on the 1st floor could be converted into a store front (I'm thinking small laundromat for the 8-plex? Nobody has W/D.)
• Asking $290K for the place.
• Near the downtown square - the town is undergoing a revitalization currently and there is a 12-story highrise going up in the next few years just one block down the road.

Jerry W. · Answer

@Chris Jackson, the basic numbers look good to me.  You need to run all the expenses to see how it nets out.  In my area this would be a good deal.  It also looks like there is a decent chance you will see price appreciation from gentrification.  We dont have any really bad neighborhoods in my local area, but be very careful on location.  If the neighborhood goes the other way it will have a negative effect on your property value.  Be careful on doing fix ups to apartments to try to increase rents, as some areas will not show any difference in rental rates regardless of how nice you make them.

Nancy Curran · Answer

You can get away with one washer/0ne dryer. Buy them used. Put in a corner of a basement. Put a table/old kitchen cabinet for their soap. You don't make a whole lot but it is cash...

Allen Hayes · Answer

just for reference on the laundry room, my 20 plex has a laundry room, I remodeled it and brought it up to 4 pairs of machines and I still dont make much money.  I plan to move the laundry next year and turn that space into part of an apartment to get more rent income.  Laundry room is really just an amenity to make up for no washer dryer hookups in units here.

Keep in mind you'll be getting higher utilities, less rent and buying four sets of machines that on the very low end run 2k per set and now I check it about every other day just to make sure its working.  A rented apartment is way less work and more income.

Nancy Curran · Answer

Well, if that is the case, a community laundry, but you usually need a worker though to open, clean, give quarters back when people lose them, generally watch the place. Plus, the mafia owns the laundry genre, (how money laundry got the name), so I don't think opening a neighborhood laundry for all to use is super easy.

Chris Jackson · Answer

looks like taxes are about 3000 and the utilities for the year are about 16500. the etc is metered out but the water and sewer aren't. I was thinking the laundry would just be for the tenants not the public. not sure about the basement for laundry. it is unfinished and dirty but it is quite large. I could easily get 4 washers and 4 driers down there. that sounds like an expensive thing to do but that would keep the other place producing income which I love. the condition isnt great on the inside apartments. they all from what I saw today need some cosmetic work. but they're all rented also which is nice.

Chinmay J. · Answer

@Nancy Curran - I think his intention is to make it commercial business for tenants and retail customers alike. That's just a guess though. I could be wrong. Plenty of laundromats in low income neighborhoods, where people don't have washer/dryer in the building or in their unit.

Nancy Curran · Answer

Can't you use anyplace else, like a basement, for a laundry? Why waste a storefront/rental unit on that?

Christopher Hutchins · Answer

The laundromat sounds like a good addition, but will residents actually use it? You're giving up potential rent in return. Either way, sounds like a decent deal. How would this place be financed? Also, would it be self-managed?

Samantha Klein · Answer

Sounds like a solid deal, however, I'd need to know the numbers for utilities, taxes and insurance. Thats only $36,250 a unit at full asking price, and if you can convert the store front to laundry for the tenants, I'd use coin op machines. What utilities is the Landlord paying? Heat and water? Do you have actual numbers for the past 12 months?

8-plex - Should I pull the trigger?

Most Popular Reply