New Investor - commercial and residential units

[Drew G.]

Dec 30, 12:43 PM Vote
Hello All,
My wife and I are looking at two 3 unit buildings that are being sold as a package or they can bought indvidually. I have been doing a lot of reading and using the spreadsheets I found on this site to prodcue some analysis. If possible I would like to hear some feedback on the properties below:

Property 1: Listing price $149,000
2 Commercial Units & 1 Residential

Income: $17,499
Factored in a Vacancy/Loss Rate = 5% or $921

Expenses:
Taxes = 2200
Insurance = 700
Trash = 400
Water/Sewer = 1,000
Maint = 2,000 (high estimate)
Total Expenses: $6300
Expenses of % of Gross Income =39.20%

NOI = $11,199
Mortgage = $7,854
Total Cash Flow = $3,345 Cash ROI =7.37%

Property 2: Listing price $149,000
2 Commercial Units & 1 Residential

Income: $17,100
Factored in a Vacancy/Loss Rate = 5% or $900

Expenses:
Taxes = 2600
Insurance = 800
Trash = 400
Water/Sewer = 800
Maint = 2,000 (high estimate)
Oil = $3,900
Electric =$1,800
Total Expenses: $12,300
Expenses of % of Gross Income =73.33%

NOI = $4800
Mortgage = $7,854
Total Cash flow = (3,053)

Property 2 obviously does not look good on paper because of the expenses due to oil and electric.

She has them listed to buy both for $289,000. If you combine the properties they come out to a positive cash flow with expense at 52.2% of income. My thoughts were get the seller to come down on price so I can convert from oil to natural gas and also pass the electric onto the tenants to cut costs.

Any opinions on this would be greatly appreciated!!! Thanks