The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  • Sell-Me Saturday is Now Live!

    Have something to sell? Like to post a video from your YouTube channel? Want to promote your design service? Recommend a company? SELL-ME SATURDAY is your opportunity to self-promote whatever you'd like within the realm of entrepreneurship on one central thread... and at no cost. Go There
    Note: Indiscriminate SEO backlinking to questionable material is not allowed.
  • Join 50,000+ entrepreneurs who are earning their freedom and living their dream.

    "Fastlane" is an entrepreneur discussion forum based on The C.E.N.T.S Framework outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED®). From multimillionaires to digital nomads to side hustlers who are grinding a job, the Fastlane Forum features real entrepreneurs creating real businesses with one goal in mind: Freedom— both financial and temporal.

    Download (Unscripted) Download (Millionaire Fastlane) Register
    Registering for the forum removes this block.

REAL ESTATE general practice of evaluating multi-units

ryanpal

Contributor
Read Millionaire Fastlane
Jul 26, 2007
363
21
35
nj
hey guys. it's been a while since i've been able to continue my education in the area of apt buildings. i just received the following spreadsheet. i'm trying to build practice in evaluating these things as they come in. from a general standpoint, please comment on the following if it were sent to you:

Rental Income 35 Apartments
INCOME Monthly , Annual
700/each estimated value
$24,500.00, $294,000.00

EXPENSES

Monthly, Annual
Electricity $1,000.00, $12,000.00
Water/Sewer $1,400.00, $15,000.00
Ground Rent $15.00, $180.00
Insurance $1,800.00, $21,600.00
Trash $250.00, $3,000.00
Telephone $85.00, $1,020.00
Repairs $1,500.00, $18,000.00
Supplies $500.00, $6,000.00
Taxes and Registrations $250.00, $3,000.00
Bristol $75.00, $900.00

TOTAL $6,875.00, $80,700.00

NET Income $17,625.00, $213,300.00

---
right off the bat i can see there's no maintenance costs. furthermore they are assuming 0 vacancy.

what problems do you guys see?

ryan
 

Don't like ads? Remove them while supporting the forum. Subscribe.

JScott

Legendary Contributor
EPIC CONTRIBUTOR
FASTLANE INSIDER
Speedway Pass
Aug 24, 2007
4,010
7,102
1,731
If you're just looking for something that returns a decent cash-on-cash return, and if this is all the information you have, I would suggest building your own pro-forma setup sheet, and then figure out a reasonable purchase price given a reasonable cap rate. After that, make an offer at some % less than that purchase price, and there's your potential short-term profit.

Unfortunately, you don't have enough information here to do much more than that. So, here's the stuff I would focus on:

- First, there is no loss rate associated with the income. But, I have to assume that due to vacancy and non-paying tenants, you will not see the full $24,500 in monthly income. Oh, and if you are actually seeing that amount, there's likely room to raise rents.

- Next, are there any one-time capital costs associated with fixing the place up or with deferred maintenance? If so, that needs to be calculated into the equation.

- Is there any other income associated with the property? Vending machines, laundry, parking, etc?

- As for expenses, some things I noticed:

- Insurance is $21,600 per year and taxes are only $3000 per year. Those numbers seem out of whack to me...you should verify

- Repair costs are estimated at $1500/month. This is less than $50 per unit, which is way low.

- You have no property management costs built in. If you expect to use off-site management, figure 8% of income. If you expect to use on-site management, figure some salary and potentially the allocation of a unit for an on-site manager.

- You don't list any advertising costs, but unless the place is on a major road, you probably will need to do some advertising.

- Do you need to figure in legal/financial costs for professional assistance?


Those are the major things I noticed. Is there a price associated with this property?
 

Create an account or login to comment

You must be a member in order to leave a comment

Create account

Create an account on our community. It's easy!

Log in

Already have an account? Log in here.



Don't like ads? Remove them while supporting the forum. Subscribe to become an INSIDER.

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Monthly conference calls with doers
Ideas needing execution, more!

Join Fastlane Insiders.

Top Bottom