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What would be good conditions when looking for an investment property?

Brian G asked:


I want to start off with a four unit apartment building and use that as leverage to attain more properties. What statistics should I look for that will shoot out a red flag of interest to make them the most appealing, cap rate, operating expenses, taxes, etc…? I want to have a local real estate management company look after it since they are more experienced in managing properties than I am. I know this will decrease the amount of cash flow the property will produce but at least I know the property is managed properly.

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By: Admin | 02/27/09 | Renting & Real Estate | Trackback | Comments [RSS 2.0]

3 Responses to “What would be good conditions when looking for an investment property?”

  1. codysdoor
    Comment by codysdoor | 02/27/09 at 11:39 am

    Flatlake real estate

    You look for cash flow. Simple right? :)

    As a ROUGH rule of thumb, I look for a property that’ll bring in about 1% of the purchase price a month in rent.

    Lets say you find a 4 plex for $200k and it brings in $500 unit. That would fit into that ‘rule’.

    At 1% of purchase price in income each month, that should cover your mortgage, expenses (common area lights, trash, water), taxes, insurance, etc.

    If you can find something that brings in more — great. But 1% should be minimum. The only time I buy something where the rents are less is if it’s in a good area and I’m being helped by appreation.

    I have some four plexes that bring in $600/month per unit (a bit more actually as they pay $150/week) that I was thinking of selling for ~$200k. They have managment setup already and everything is done and managed online (so I can check status any time)

    If interested, let me know (PS: I’m not a very motivated seller so I’m not going to low ball sell these as they bring in pretty good money for me :-) .

  2. Doctor Deth
    Comment by Doctor Deth | 03/01/09 at 3:16 am

    Oakland commercial real estate

    well, the rent income needs to cover your mortgage, property taxes, insurance, utilities, maintenance and some extra to save up for major things like new roof and profit.

    also – if the building has a history of being less than 100% occupied at all times, then I would avoid it – might not make enough to cover all your costs

    make you you get complete inspections on any building you plan to buy – you don’t want any surprises – talk to the tenants if possibly about any unaddressed problems

  3. kemperk
    Comment by kemperk | 03/03/09 at 5:26 pm

    Flatlake real estate

    depending on where you buy, a pre-bubble cap rate that was
    average was 4-8, outside of Calif. Today, you can get 25% more.

    and I have a tool I invented to help collect rent…if you want it.

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