Did i pay too much for my latest property?

[Michael Sifontes]

Hello guys,

So I was wondering if any of you can share any templates or rules of thumb you have when deciding if a property is worth the investment. For example, I recently purchased a 5-plex (3-1 bed and 2-Bach) in London Ontario (1.3% vacancy)for 340,000$ I estimate 40,000$ needed to bring the building to tip top shape. I can get around 42,000$ per year in rental income once I renovate. Annual expenses will be about 6500$ total. So my question is..... did I pay too much for this building? From my numbers I cash flow about 20,000$ a year pre-tax. Is there a formula you have that can let me know how much I should pay for a property based of the historic numbers?

Secondly I was also thinking to turn the basement into 2 more bachelor units. How hard will it be for me to get the property rezoned? Can I apply before I am the actual owner? Any help will be greatly appreciated.

My initial investment for this will be about 76,000$

[Joseph Gozlan]

@Michael Sifontes you did a wonderful/horrible investment. Pick whichever you are looking to hear. 

If you already purchased it, what does it matter what a bunch of people on the Internet think about it?

We all have different objectives and financial goals and while some of us buy for appreciation, some of us won't touch a property that doesn't cashflow with a stick. So what a CA guy think is a great investment a OH might think it's a disaster waiting to happen. 

My advice, focus on you property and pay close attention to the numbers month over month and try to build cash reserves to handle whatever the gods of rentals throw your way. 

For your NEXT property, you can use the BP calculator (biggerpockets.com/calc) to analyze it BEFORE you buy...

Good luck and congrats on purchasing your (first?) multifamily!