Please evaluate this deal.

[macjoubert]

8 unit apartment complex 100% occupied with leases till next year:

Purchase price -  190,000
20% down - 38000
Monthly payment - 1011@ 7% 30 years commercial loan.

Gross income : Rents 550pm - 52800 pa

Expenses :

• Prop Mgmt 8% gross rent -  4224
• Tax Insurance Misc Maint - 9200

total expenses -  13324


Net income - 39476
Cash flow - Net income -Debt service = 2278 pm

How does this look?

[Mr Investor]

With the #'s you given here is how I see it:

Rents-$4400
Expenses-$1110
NOI-$3290
Debt Service-$1264
Cash Flow-$2026 or $253.25 per unit which is very good.

Even if you use the standard 50% rule it would still look good.

[JakeRodgers]

How did you find a commercial lender to go out to 30 years?

[macjoubert]

How did you find a commercial lender to go out to 30 years?

Small Business loan.

[propertymanager]

Macjoubert,

The numbers you poster are pure FICTION!  You left out the majority of the expenses.

Here's how this deal would look in the real world:

Gross rents $4,400 per month
Expenses (including vacancy and capital expenses)  $2,200
NOI:  $2,200

Debt ($190,000, 30 yr, 7%): $1,264

Cash flow:  $936 or $117 per unit per month.  Still a good deal, but not even close to the numbers originally posted.

Good Luck,

Mike

[shahv]

Are small business loans available for rental properties ? How does one go about getting them?

[torojd]

I'm not sure why you would need a second opinion when u know in fact that it's a good deal.

With a cap rate of 13.9%?  Wow! (doesn't include debt service)
now...
let's add the debt service of another yearly exp of 13,212 and we get around an 8.5% cap rate.  not bad, not bad at all.