Am I overpaying for this property? 6 Unit Sale Price $265,000

[Andrew Michaud]

I am in the process of purchasing a 6 unit apartment for $265,000. It's very localized, B-Class area. A walk away from many gas stations, grocery stores, 1 mile away from the hospital and walking distance from schools. Property is in great shape, new roof, vinyl siding, new windows and heating systems are in good condition. I usually set myself a maximum price I am willing to pay per door, but I have gone beyond that on this one because of location and its quality units. Here are the specs without getting far into detail.

Purchase Price - $265,000

Tax Value - $255,000

20% Down Payment - $53,000

20 YR Mortgage

All Tenants pay utilities. Heat, electric, cable, water and sewer is metered out also.

Insurance, taxes, trash, vacancy, repairs, snow/lawn add up to 18k.

Gross Income - $56,000

Mortgage - $16,000

Income after expenses and debt services - $22,000

Cash Flow Per Door - $305

CoC Return - 41%

Cost per Door on purchase price - $44,000

Retail per door in my area currently - 30,000-35,000.

Numbers work great. Expenses are accurate and very low due to tenants paying all utilities. I am paying above what I feel I should pay on paper, but it is a nicer property than many around here. All units are 2 bed 2 bath, ground floor, and have their own 1 bay garage. 

I know the numbers work. My question for everyone is the purchase price looking at tax value and retail per door.

[Bjorn Ahlblad]

If that was in my area we would crawl on hands and knees over miles of broken glass to get anything near that! Tax value has no real tie to current sales price. No matter how good it looks always get a rent roll, financials and an inspection. All the best!