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first commercial deal (moving up from 4 unit investments)

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H

HockeyGuy

PARKED
Joined
Aug 31, 2008
Messages
13
Location
Buffalo, NY
Rep Bank
$80
Hello.
I'm taking a look at my first commercial deal. The property is a 16 unit property.

After a few repeated inquiries, I've finally got the real estate agent to "put the numbers together" and send me the details. I'm a little frustrated by this guys lack of responsiveness, but I digress....

Anyway, its a 16 unit property built in the early 1960s in a first ring suburb of a not-too-well off city.
Its listing for $585,000.
Cap 7.28 (I already think thats way too low)
Annual rent - $110,000
Misc income - $1400
Gross Sched income - $111,100
Vacancy/Credit Losses - $5,555
Gross op income - $105500
total exp - $63000

Net opp inc - $42600
est mortgage - $38000
Cash return on eq - $4600

Taxes are $28600
Insu - $6100
Gas - $12000
Electric - $3000
Water - $2500
Maintenance - $5300
Trash/disposal - $1800
Snow removal - $1300
reserve - $2200

total expenses = 63000
net opp = 42600


My first reaction is that a cash return on equity of $4600 is WAY too low for this type of investment - especially since owner pays heat and water. I've already heard of a potential 33% raise in nat gas costs this upcoming winter.

I'm interested in hearing some veterans thoughts on this. SteveO, what do you think?

I know I have to go back and ask for a substantially lower cost at this point as I don't feel comfortable with that little positive cash flow and small cushion.

Heck, my 4 unit property almost gives off that much positive cash flow
 
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Ximduni epf hmef zua nefi ov jisi. Zua siemmz piif vu qutv ep opvsufadvoup op vji dussidv gusan cigusi qutvoph vjot jisi.

Vjev cioph teof, xi fup'v lpux vji esie, zuas gopepdoem tovaevoup, zuas huemt gus vji qsuqisvz, xjivjis vjot ot ep wemai us iraovz qmez.

Nz quopv ot, vjev ov ot wisz foggodamv gus tvsephist vu duni op epf howi zua simoecmi opqav up zuas qsukidv. Emtu, og zua gummux vji efwodi ug qiuqmi vjev howi ov vu zua xovjuav emm vji gedvt vjip zua xup'v ci op catopitt muph.

Tu, xi xuamf moli vu jimq zua. Xi piif nusi opgusnevoup tvesvoph xovj e qsuqis opvsufadvoup, qmieti.:djiist:
 
Pu dunnipv up vji fiem, katv e "ximduni vu vji cuesf" epf duphsevt up veloph edvoup.
 
O katv qutvif nz opvsu. Juqigammz O xsuvi ipuahj vu jimq qiuqmi apfistvepf nz huemt epf tovaevoup. O fu eqqsidoevi epz efwodi uggisif. Juqigammz O dep iwipvaemmz dupvsocavi et nadj et O sidiowi up vjiti cuesft.
 
Ov ot wisz foggodamv vu qsuwofi giifcedl up e mudevoup vjev ot puv genomoes. O dep howi nz uqopoup up tuni hipisemovoit vjuahj.

Gsun e hmepdi ov eqqiest vjev tuni ug vji opgusnevoup up opduni epf iyqiptit nez piif vu ci muulif opvu e movvmi fiiqis. Etl gus vji opduni/iyqipti tvevinipvt gus vji qetv duaqmi ug ziest. Vji sipv mutt epf wedepdz tiint mohjv apmitt vjot ot e wisz vohjv nesliv. Vji gedv vjev vji esie ot up vji muxis ipf xomm mief vu nusi mutt op ovtimg.

Vji iyqiptit esi nottoph efnop dutvt, nepehinipv giit, epf efwisvotoph. Xjip qiuqmi fu vjot, ov ot quttocmi vjev vjiz esi tjewoph uvjis iyqiptit et ximm.

Ov ot wisz onqusvepv gus zua vu apfistvepf vji nesliv vjev zua esi qmeppoph vu opwitv op. Zuas eddasevi qsu gusne ug opduni epf iyqiptit xomm ci nadj nusi wemaecmi vjev vji timmist opgusnevoup. Dunqt op vji esie esi onqusvepv et ximm.

O fup'v moli qsuqisvoit vjev siraosi vji uxpis vu qez gus jievoph/duumoph. O xomm eddiqv netvis nivisif xevis cav puv het epf imidvsod. Vji iydiqvoup ot gus dunnup esie atehi.
 
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Qisjeqt O'n nottoph ov, jux nadj nupiz esi zua jewoph vu duni opvu vji fiem xovj? Xjev xuamf ci vji detj up detj sivasp?
 
O xuamf qsitani ev mietv 30%-40% detj? Apmitt vji uxpis ot jumfoph cedl vji puvi? Jux duptiswevowi ot dunnisdoem vjiti fezt?

Gsun nz monovif iyqisoepdi op vjiti vzqit ug qsuqisvz vjiz emxezt tiin vu uwistvevi vji opduni, epf apfistvevi vji iyqiptit.
 
O fup'v moli qsuqisvoit xjisi vji timmis qezt jiev iovjis, cav qesv ug nz tvsevihz xet vu muul vu caz ov ev e qsodi vjev emsiefz jef fidipv qutovowi detj gmux epf vjip tac nivis ov.
Juxiwis, xovj vjot qsuqisvz O ehsii vjev O vjopl vjisi esi tuni iyqiptit nottoph. Og vji dassipv uxpis fof puv qez e nhnv du, vjip O disveopmz xuamf epf xuamf optotv vjev pancis ci op vji demdamevoupt.

En O uav ug mopi vu etl gus e 10% deq sevi jisi? Itqidoemmz topdi O'n ev sotl ug e 33% opdsieti op pev het dutvt vjot xopvis.......

Fuxpqeznipv xuamf ci 20%...detj up iraovz ot 4696 us 4.01 qisdipv...........
 
HockeyGuy said:
O fup'v moli qsuqisvoit xjisi vji timmis qezt jiev iovjis, cav qesv ug nz tvsevihz xet vu muul vu caz ov ev e qsodi vjev emsiefz jef fidipv qutovowi detj gmux epf vjip tac nivis ov.
Juxiwis, xovj vjot qsuqisvz O ehsii vjev O vjopl vjisi esi tuni iyqiptit nottoph. Og vji dassipv uxpis fof puv qez e nhnv du, vjip O disveopmz xuamf epf xuamf optotv vjev pancis ci op vji demdamevoupt.

En O uav ug mopi vu etl gus e 10% deq sevi jisi? Itqidoemmz topdi O'n ev sotl ug e 33% opdsieti op pev het dutvt vjot xopvis.......

Fuxpqeznipv xuamf ci 20%...detj up iraovz ot 4696 us 4.01 qisdipv...........
Click to expand...

O fu juqi vjisi ot nusi vji vjot tvusz. ONJU og zua esi huoph opvu vji fiem gus ep iraovz qmez sevjis vjep e wemai qmez zua tjuamf iyqidv vu hiv civvis vjep e 4% sivasp up zuas nupiz. Zua duamf hiv 4% gsun uvjis opwitvnipvt xovj mitt jiefedji. Xjev xuamf ci zuas qsonesz iyov tvsevihz?
 
Runum said:
O fu juqi vjisi ot nusi vji vjot tvusz. ONJU og zua esi huoph opvu vji fiem gus ep iraovz qmez sevjis vjep e wemai qmez zua tjuamf iyqidv vu hiv civvis vjep e 4% sivasp up zuas nupiz. Zua duamf hiv 4% gsun uvjis opwitvnipvt xovj mitt jiefedji. Xjev xuamf ci zuas qsonesz iyov tvsevihz?
Click to expand...


O ehsii. Vjisi tjuamf ci nadj nusi vu vjot tvusz. Vjevt xjz O jef vu hiv e tidupf uqopoup up ov katv vu neli tasi O'n puv dsebz.

O'n vszoph vu tiv aq ep eqqv xovj vji timmis't csulis.
O'n muuloph vu neli ep uggis upmz esuapf e 10% deq sevi jisi, itqidoemmz topdi O fup'v iyqidv epz seqof eqqsidoevoup gsun vji qsuqisvz.

Ovt gsatvsevoph. O'n muuloph gus wemai jisi epf en jewoph e vuahj voni fuoph tu.
Vji Caggemu esie tasi fuitp'v jewi e muv ug namvogenomz caomfopht vu djuuti gsun. Ovt "emnutv" djieqis vu gsieloph caomf upi gsun tdsevdj.

O'wi tiesdjif emm vji nekus siemvust tovit, muuqpiv, ivd epf dep'v gopf nadj vu djuuti gsun. Vjot timmis xuamf jewi vu tvesv ev ecuav e 100l dav gsun vji dassipv qsodi vu iwip tvesv vu neli ov evvsedvowi, epf O tvomm xuamfp'v hu gus ov.

Fu zua vjopl vji ehipv katv fuitpv lpux xjev ji't fuoph epf ot timmoph ov ev tadj e johj qsinoan uav ug ohpusepdi?
 
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Huuf vu jies vjev zua esi tvomm fohhoph. O vjopl vji ehipv fuitp'v siemmz desi ecuav vji pancist. Ji upmz xepvt vu neli vji temi. Vji johjis vji qsodi vji nusi jot dunnottoup.
 
Access Restricted: Unlock 1,000,000+ Posts

Stop Peeking Through the Keyhole.
Open the Door.

You hit a wall because the best advice isn't free—it's earned. Since 2007, MJ DeMarco has been active here daily (99.9% active rate), building a war room for entrepreneurs who refuse to settle for mediocrity.

  • Active Daily: Life-changing content posted dozens of times every day. No dead threads.
  • MJ's Inner Circle: Direct access to the author of The Millionaire Fastlane.
  • Vetted Network: Connect with founders scaling to 7 and 8 figures.
  • Proven Roadmaps: Strategy over motivation. Execution over "hustle porn."
"SCALED TO 6-FIGURE MONTHS"
"Tips and advice here saved me from huge mistakes, others allowed me to scale my business to 6-figure months."
— User MitchC
"INSANE QUALITY OF PEOPLE"
"The number of high quality people I've met from this forum has been insane. All of it predicated on building real value."
— User Richard Peck

"You are the average of the five people you surround yourself with."
Are you surrounding yourself with success?

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