2F in greater Albany area

[Kara Haney]

I am looking at a 2F for 60K that presumably can rent for 750 each unit in Amsterdam NY - taxes are about 4K/year, separate everything and 2 car garge -sound worthwhile ? any advice? thanks

[Ryan Vienneau]

Hi Kara,

Without getting into a ton of the details of the property itself and expenses, based on a couple rudimentary rules-of-thumb it sounds worth investigating further:

1. The 2% Rule - Your rents are 2.5% the sell price, which is good, you've probably seen on here that 2% is a good minimum to shoot for.  

2. Cap Rate - If you assume (which you shouldn't, you should find out for sure...) that expenses will run at 50% of your rents, that leaves you $9k NOI/year ($750/mo x 2 units x 12mos x 50%). $9k/$60k = 15% Cap rate, which most investors would be pretty proud of.

HOWEVER, there are several other numbers and metrics you'll want to know before jumping in, particularly cash-flow and cash-on-cash return which requires you to factor in your financing method and costs.  Beyond that, obviously you'll want to more deeply dig into the expenses, taxes, condition, etc, but based purely on the ration of rents to purchase price, it sounds like a deal worth looking further into.  

And by the way, knowing Amsterdam, TRIPLE CHECK the tax numbers with the city, don't rely on the seller or the agent's numbers, Amsterdam taxes are notoriously high and can kill your profitably in a hurry if you're not careful.  Good luck!