Posted by Jimmy on June 26, 2009 at 09:54:47:
In Reply to: Please analyze this deal.... posted by Joe-M on June 26, 2009 at 04:56:05:
first, your gross annual rents are 6.36% of your purchase price. that is just ahair higher than your cost of borrowing. you're gonna be in a massively negative cash flow position for as long as you own this property, even if you buy it all-cash.
second, the broker is not being honest about the operating expenses. request the tax returns for a more realistic view of things. he's representing a 1.8% operating expense load. HA !!!!!!!! that's a joke. you should expect your expense load to run 40% of gross rents. I'm talking about repairs, maintenance, property taxes, insurance, and vacancy. any utilities you have to pay are not included in this load. nor is landscaping/lawn care, etc.
compare this to a 4-plex in East TX (where I do biz). renovated. fully occupied at $375 per unit. 3400sf. $130,000 is all my market will support for such a property. now compare the numbers. I'm getting twice as much rent for my capital. I have four of these 4-plexes, all with similar numbers.
come to the cash flow, my friend. !!!!!!!!
good luck
- Re: Horrible Deal!! Joe-M 14:44:43 06/26/09 (1)
- I Erred---but still don't like numbers Jimmy 15:35:24 06/26/09 (0)