First Investment Purchase?

[Joe Young]

Hey everyone,

I am looking to purchase my first building and would like some counsel from experienced investors.  Attached at the bottom of this post, you will find a link to a calculator where I have input all of the information for the property.  A cap rate of 4.85% makes me a bit nervous, but this property is in a great location and according to the seller and listing agent, is in need of 0 repairs and is fully rented with reliable tenants.  Am I rushing?  Should I hold out for a better deal?  Is there more information needed to make an informed decision?  If you have time to look over the numbers, I would really appreciate it!

https://www.calculator.net/ren...

[Joe Young]

Originally posted by @Paul De Luca:

Originally posted by @Joe Young:

Originally posted by @Paul De Luca:

Originally posted by @Joe Young:

Originally posted by @Paul De Luca:

@Joe Young

1. Is this multi-family?
2. What market are you in? The cap rate makes me think it's an A class neighborhood.
3. What is included in "Other Cost"? I don't see utilities broken out so I will assume that's included but that seems like a pretty large expense.
4. What is the age of all the CapEx? Condition of the roof, mechanicals, siding, etc are important.

Take what the seller and listing agent are saying about the repairs & maintenance and tenants. You need to do your own due diligence by getting an inspection and request deposit/collection statements of tenant rents in the past 12 months. You'll want an attorney to review all of the tenant leases as well.

Hey Paul, thanks for taking the time.  

It is a 4 unit building in an A class area, but sort of the B class section, if that makes sense. 

The other expenses include $3600 for water, $4021 for fuel, $2650 for trash, and $1050 listed as "other" on the MLS. Tenants pay rent and electricity.

It is written that the unit was Rehabbed in 2019, but as for the specifics such as the roof, I can't be certain without following up.  Concrete foundation, asphalt/shingle roof, that's all I have.
 

If rehabbed in 2019 then it will require minimal maintenance and it looks like you've budgeted accordingly. Are those utility estimates from the seller?

That's correct, all information is provided by seller

Seems like you should hold out for something better then, based on your numbers. 

 I appreciate the insight Paul, that was my gut feeling as well.  Buildings are not available often in the area so I wanted to hear someone else's thoughts.