All Forum Posts by: Mario J Perez

What should my offer be? Here’s the info I have.

Mixed use 3 story building.

Asking Price: $380,000.00

6 Apt. units
3 Commercial units

Income: $72,300.00 Total Yearly Rent
Expenses: $8,500.00 Total Yearly Expenses

Assuming a 7.25% Loan for 20 yrs.
Yrl. Mtg. Pmt. = +/- $36,000.00

72,000 â€" 36,000 â€" 8,500 = $27,800 NOI

27,800/380000 = 7.32 CAP

Thanks Jon

I've heard of different formulas to determine CAP rate. Two of them are:
1. NOI/Purchase price
2. (Annual rent/2)/Purchase price.
Assuming expenses are about 1/2 of income. Please explain the difference.
Once I get the CAP rate, what does it tell me?
Thanks,
Mario

Here is something I saw here on BP to determine CAP rate and thus value. The “normal†CAP rate formula is NOI/Purchase Price. But this formula does not take into account financing terms which will affect the rate of return. This formula (aka Band of Equity Investment method) tells us the max price we can pay and realize the rate of return we are looking for. The advantage being that it takes into consideration financing terms. Here it is:

Mortgage: Loan to Value of Mortgage x Mortgage Constant = ______

Property: Down Payment on Property (%) x Desired Rate of Return = ______

Mortgage: 80% (.80) x 7.99% (.0799) = 0.06 + Equity 20% (.20) x 11% (.11) = 0.02

0.06 + 0.02 = 0.08 CAP Rate

Which is a good answering service to use to answer my calls when marketing for motivated sellers?

Thanks Mitch

What is the best corporation to set up whe investing in multi family units?

I am an investor learning about the So. Fla. market. I am looking to wholesale and invest in multi-famility properties. I would like to partner/network with So Fla. investors.

I'll find out and keep you posted. Thanks.
Mario

Thanks again to all. I'll do just that. Keep looking.