All Forum Posts by: Drew G.

My wife and I are looking to buy our first investment property. I wanted to get the opinions of the experts.

An established builder in the area has built single family homes and town homes in a new neighborhood. They have many store fronts occupied with great restaurants, shops and there are only 3 townhomes left for sale. There are current investors renting the homes from 1400-1500 a month.

Purchase Price $160k Down payment 32000
Taxes=1,198
Insurance = 800
HOA = 720
Vacancy 3% = 546
Mortgage payment = 7200

I would have cash flow and a greater return on investment than a passive investment.
Should I consider this or find something else for my money.

Thank you!![b]

Hello All,

I am the beginning stages of purchasing my first commercial/residential unit. The building has 4 commercial units and 2 apartments above the commercial units.

I have spoken to a few local banks about financing and have found these two options to be common.

20% down

4.99% for 5yrs. Then after 5 years variable. 20 year term
Or
5.99% fixed for 10yrs and resets after that.

This is my first time doing this and wanted to get your opinion! Thank you in advance.

John F.

Jeff. Thank you for time. Do you agree with a price of 175k?

Well said Joel!!! Thank you

Uwe

Yes fully rented. I'm in the process of getting the P&L.
I agree it's well over priced. How did you arrive at 175k?
Being new to this what formula would you use to come up with my offering price?
Thanks for your time.

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

Thank you for the responses.

The commercial tenants are a head hunting firm, insurance agency, cpa, and an engineering firm. The owner hasn't done a thing to update the units and it obviously shows in the amount of rent she is getting.

It's needs paint, new doors, and new flooring. The area the buildings are in has really grown and has diversified the types of businesses in the downtown area.

I would never pay 289k. She has this way overpriced.

Hi Joel

Sorry for the confusion. That's my fault.

You are correct - they both have 2 commercial units on the 1st floor and residential apartments above. Thank you

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