I have been a real estate consultant for 7 years, principally involved
in apartments leasing and development support. My associate and I became
residential real estate investors to generate an income. When we moved from NY to TX 4
years ago, we could not sell our home, so we rented it out. It is a small loft
home with more value as an owner-occupied home than a rental property,
valued at about $660,000, but generating only $4400/month in rent. We are
contemplating selling within the next year and re-investing proceeds in
income property in the TX area where we live, avoiding the long-distance
management complications. The sale will generate around $660k in equity to put
into a new property (we have only $50k mortgage balance). What I am trying
to explore is whether we could expect to “leverage up” in size and value of
property, for example buying a $1mil to $2.5 million apartment property, with
$200-400k cash down, and an 80% mortgage. We can expect the property we purchase to
cash flow? You always want all properties of this kind to generate income.
An apartment complex is traditionally priced by seeing what cash flow covers
an 80% mortgage. Conservative people put down 20-25%. I have read many books on this topic. When considering the purchase of apartments the property should be able to cash-flow nicely with 200k down depending on your market and the property type.
you should be able to find a good subject property.TipsDetermine what kind of ROI you are looking for? What are the CAP Rates in
your area?During my research cap rates on apartments of 30-72
units in the TX area seem to range from mid 6% to mid 8%, with the
older properties yielding the higher cap rates. You should educate yourself to
know what ROI you are looking for. The goal is to produce more net
cash than the SFR we would sell/exchange out of ($4400/month rent, about
$40,000/year NOI, on a property worth about $660k).
Tags: apartment building, apartment financing, apartment income producing property, Billion $ Deals™, billionaires Investors, calculate the noi, capital investing, commercial financing, commercial hard money, Department of Housing, make money buying apartments, Trillion $ Deals™, Warren Buffett, Warren BuffettWealth, Wealth, What is a subject-To
September 25, 2007 at 1:53 am |
I am always looking for a good multi-unit or commercial investment, especially if there is owner financing available.
September 29, 2007 at 4:53 pm |
How many units are you interested in and what state? I have a source that has several properties for sale. How much are you willing to pay and how much downpayment do you have?