Is 50k too much for each unit?

Question

John Thedford · Answer

You need to run all your numbers to determine what your profit or loss will be. Then you can make a better decision. Also, your questions are market specific. In most areas of SW Florida, decent units will cost at least 80K per side...probably more. So, 50K sounds cheap...but we aren't in the same market. if you have never purchased it, buy the book "what every investor needs to know about cash flow" by Gallinelli. Remember, you won't have just taxes and insurance:
taxes
insurance
utilities?
maintenance
Vacancy
management
CapEx
also potentially a few other expenses. You need to know all of these before you can make a decision.

Are you going to pay cash? If not, also remember the cost of money.

Steve Vaughan · Answer

I would love to only have to spend $50k/unit in my $900/mo plex rent received per unit area.

What is the average rent coming in per unit @Brittany Fife?

Do you pay w/s/g, power, gas or any utilities?

Is the area decent?  In a flood zone with sky high insurance premiums?

Reasonable property taxes?

Please share more!

Scott Weaner · Answer

The numbers sound reasonable to me.

Michaela G. · Answer

Anyone in NYC will say:"Grab it, it's a steal!"

In my neighborhood in Atlanta I'd say "I wouldn't touch that with a 10'-pole, unless it gets me $ 1000 per side in rent"

Location, location, location.

Every neighborhood has its own little market and values. And values for multi-units can be very different from single family homes.

For example - in my neighborhood some single family homes now sell +100K, but appraisals for my duplexes came in at 23K, even though I get $ 1000 rent. Why? Because no landlord who bought a duplex cheap in the past few years, has sold a renovated one, because they're cash cows. Subsequently, the only sales the appraisers can find, are fixer-uppers, that still need a lot of money. So, that's what they used.

So, does that mean that those duplexes are only worth 23K? Heck, no, I'd get a bidding war at that price between people with cash.

So, values can be very subjective and location dependend

Ryan Werner · Answer

You would need to provide more information to really answer that question. Try using the BP Buy and Hold calculator it will guide you step by step through all of the numbers you need. You can even post a link to the report so that others can review your numbers and look for any major issues.

Is 50k too much for each unit?

Most Popular Reply