The property Property $200,000 Down Payment 20% - $40,000 4 unit complex – rent per unit $800/month ($3200/mo total) 2% Rule – at 2% this property would rent for $4,000/mo This property is at 1.6% 50% rule – 50% of rental income will go toward expenses This property would be $1600/month This expenses include – repairs, vacancies, utilities, taxes, insurance, managements, turnover costs, and occasional big ticket repairs Net Operating Income – NOI Income after fees, these would be the fees listed in the 50% rule and do not include principle and interest For this property - $1600 (not the true number, but based on 50% rule) Cash flow Any money left after subtracting principle and interest from NOI Prinicple and Interest – 30 yr fixed at 4% on $160,000 - $764/mo Cash flow = $3200 - $1600 (NOI) - $764 (P&I) = $836/mo or $10,032/yr Cap Rate Annual NOI/purchase price $19,200/200,000 = 9.6% Return on investment of $40,000 over 30 year life of mortgage Cash flow - $10,032 annual return – 25.1% return 30 years = $300,960 This is a conservative estimate since this money could obviously be re-invested as it was received monthly and the rent would be increased to reflect inflation over the 30 year period Property value at 3% appreciation for 30 years $485,452 30 year total return on $40,000 485,452+300,960 = $786,412 This is a ~10.5% annual return on investment $40,000 invested in stocks/mutual funds at 7% would have returned $304,49I believe this is all correct, but wanted to get some feedback to confirm my understandings of these concepts was correct.  

This would be a long term hold for cash flow and would be a stepping stone from smaller multi's (own 13 units in 4-5 unit complexes now) to larger apartment buildings.

If you are intentionally paying someone under the table, maybe a property manger at a complex, then you could owe $250 for intentionally not filling.

There is very little, if any, residential in the immediate area.We own a couple of properties in the Aurora / Denver market which benefited greatly from a similar redevelopment, where the University of Colorado and various other medical entities consolidated into one major complex/area, and that spurred all sorts other businesses (medical-related as well as others such as hotels, restaurants, etc.) and residential property values in the area have appreciated very nicely. 

Hi all, I'm a first time investor who is interested in apartment complex deals.

I've been investing in SFRs for the past three years, but I'm trading up to start investing in small apartment complexes.

My passion is to own an entire apartment complex and rebuilding my team!

The other thing I will mention is a similar unit in the complex has been on the MLS for 150 days and has not sold. 

The MHP business is very complex.  

Be sure to look closely at recent sales in the same complex when determining your ARV.