Questionable price on an investment property

[Ash Housewares]

This property is in Atlanta, but I still hope to get some feedback. From ZipRealty:

Description
Please read – must drive by property before calling for additional information. 9 unit complex (2br/1ba each) which nets $27k per year. (owner managed, no management company) building is 100% occupied!!

List Price: $305,000

My question is how to interpret the “nets 27k” statement. If he means gross, that is only $250 per month per unit. I don’t know what rents are in Atlanta, but I’m pretty sure a 2br must be more than $250. At $600 a month per unit this property is listed for only 4.7x gross rent. What is going on here?

(address is 700 NEAL STREET, Atlanta, GA 30318, but listing shows now as inactive)

[NotCranky]

“must drive by property before calling for additional information.”

This comment strikes me as odd. I think, why wouldn’t they want to discuss the property with you? What if you are from out of the area?

I searched craig’s list for Atlanta rentals and from that it appears that you are correct, they should be around $600 or better. So maybe the seller actually meant “net”? In that case I would have serious concerns about the building or the area because deals like that don’t linger,if they come up at all. Of course it says don’t call for additional information until you drive by! Some questions you might ask if you did call are, what are the rents ,are there are any “red flags” you should now about the building. Specifically ask about any structural, title or code enforcement issues. Is it for some reason expensive to insure?

If it is a scam deal they wont want to talk with you much or they will say things to make you very worried….like they don’t want an escrow or something like that. If things seem too good to be true they probably are.

[NotCranky]

“must drive by property before calling for additional information.”

This comment strikes me as odd. I think, why wouldn’t they want to discuss the property with you? What if you are from out of the area?

I searched craig’s list for Atlanta rentals and from that it appears that you are correct, they should be around $600 or better. So maybe the seller actually meant “net”? In that case I would have serious concerns about the building or the area because deals like that don’t linger,if they come up at all. Of course it says don’t call for additional information until you drive by! Some questions you might ask if you did call are, what are the rents ,are there are any “red flags” you should now about the building. Specifically ask about any structural, title or code enforcement issues. Is it for some reason expensive to insure?

If it is a scam deal they wont want to talk with you much or they will say things to make you very worried….like they don’t want an escrow or something like that. If things seem too good to be true they probably are.

[NotCranky]

“must drive by property before calling for additional information.”

This comment strikes me as odd. I think, why wouldn’t they want to discuss the property with you? What if you are from out of the area?

I searched craig’s list for Atlanta rentals and from that it appears that you are correct, they should be around $600 or better. So maybe the seller actually meant “net”? In that case I would have serious concerns about the building or the area because deals like that don’t linger,if they come up at all. Of course it says don’t call for additional information until you drive by! Some questions you might ask if you did call are, what are the rents ,are there are any “red flags” you should now about the building. Specifically ask about any structural, title or code enforcement issues. Is it for some reason expensive to insure?

If it is a scam deal they wont want to talk with you much or they will say things to make you very worried….like they don’t want an escrow or something like that. If things seem too good to be true they probably are.

[NotCranky]

“must drive by property before calling for additional information.”

This comment strikes me as odd. I think, why wouldn’t they want to discuss the property with you? What if you are from out of the area?

I searched craig’s list for Atlanta rentals and from that it appears that you are correct, they should be around $600 or better. So maybe the seller actually meant “net”? In that case I would have serious concerns about the building or the area because deals like that don’t linger,if they come up at all. Of course it says don’t call for additional information until you drive by! Some questions you might ask if you did call are, what are the rents ,are there are any “red flags” you should now about the building. Specifically ask about any structural, title or code enforcement issues. Is it for some reason expensive to insure?

If it is a scam deal they wont want to talk with you much or they will say things to make you very worried….like they don’t want an escrow or something like that. If things seem too good to be true they probably are.

[surveyor]

The “net” in the statement seems to refer to cash flow, but it could also be NOI (net operating income).

Doing a basic calculation of the property:

List price of $305k, Gross Income of $600*12*9=64,800. Assumed expenses around 33% of the gross income = 21,384.

I get a cash flow of about $25k. NOI = $43k.

So it seems that the $27k is about cash flow. But you’d probably better ask the owner about the numbers (always a good idea when investigating investment properties).

[Bugs]

Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.

Your net would be a bit lower as an absentee owner. At the very least you’d want to find a good property manager to run it and you could expect pay an additional $200/month or more in expenses.

[(former)FormerSanDiegan]

“must drive by property before calling for additional information.”

This is a standard phrase that means that either the building is fugly or in a neighborhood where you are afraid to even stop your vehicle.

[Anonymous]

“Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.”

Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? Anybody know the numbers from the ’96 for investment RE? Would it better to wait for more decline or just start shopping out of state like this deal? My only issue is you have to factor in the costs of travel when buying far away since something always comes up you have to go in person to deal with.

mglsharkson

[Jumby]

“Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? ”

100 times rent is usually a pretty safe number.

[Jumby]

“Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? ”

100 times rent is usually a pretty safe number.

[Jumby]

“Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? ”

100 times rent is usually a pretty safe number.

[Jumby]

“Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? ”

100 times rent is usually a pretty safe number.

[Anonymous]

“Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.”

Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? Anybody know the numbers from the ’96 for investment RE? Would it better to wait for more decline or just start shopping out of state like this deal? My only issue is you have to factor in the costs of travel when buying far away since something always comes up you have to go in person to deal with.

mglsharkson

[Anonymous]

“Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.”

Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? Anybody know the numbers from the ’96 for investment RE? Would it better to wait for more decline or just start shopping out of state like this deal? My only issue is you have to factor in the costs of travel when buying far away since something always comes up you have to go in person to deal with.

mglsharkson

[Anonymous]

“Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.”

Which begs the question – what kind of numbers would make SD attracted to invest in again from a cash flow view? Anybody know the numbers from the ’96 for investment RE? Would it better to wait for more decline or just start shopping out of state like this deal? My only issue is you have to factor in the costs of travel when buying far away since something always comes up you have to go in person to deal with.

mglsharkson

[(former)FormerSanDiegan]

“must drive by property before calling for additional information.”

This is a standard phrase that means that either the building is fugly or in a neighborhood where you are afraid to even stop your vehicle.

[(former)FormerSanDiegan]

“must drive by property before calling for additional information.”

This is a standard phrase that means that either the building is fugly or in a neighborhood where you are afraid to even stop your vehicle.

[(former)FormerSanDiegan]

“must drive by property before calling for additional information.”

This is a standard phrase that means that either the building is fugly or in a neighborhood where you are afraid to even stop your vehicle.

[Bugs]

Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.

Your net would be a bit lower as an absentee owner. At the very least you’d want to find a good property manager to run it and you could expect pay an additional $200/month or more in expenses.

[Bugs]

Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.

Your net would be a bit lower as an absentee owner. At the very least you’d want to find a good property manager to run it and you could expect pay an additional $200/month or more in expenses.

[Bugs]

Believe ot or not at during the last RE bust here in SD you could buy apartment buildings with those types of numbers.

Your net would be a bit lower as an absentee owner. At the very least you’d want to find a good property manager to run it and you could expect pay an additional $200/month or more in expenses.

[surveyor]

The “net” in the statement seems to refer to cash flow, but it could also be NOI (net operating income).

Doing a basic calculation of the property:

List price of $305k, Gross Income of $600*12*9=64,800. Assumed expenses around 33% of the gross income = 21,384.

I get a cash flow of about $25k. NOI = $43k.

So it seems that the $27k is about cash flow. But you’d probably better ask the owner about the numbers (always a good idea when investigating investment properties).

[surveyor]

The “net” in the statement seems to refer to cash flow, but it could also be NOI (net operating income).

Doing a basic calculation of the property:

List price of $305k, Gross Income of $600*12*9=64,800. Assumed expenses around 33% of the gross income = 21,384.

I get a cash flow of about $25k. NOI = $43k.

So it seems that the $27k is about cash flow. But you’d probably better ask the owner about the numbers (always a good idea when investigating investment properties).

[surveyor]

The “net” in the statement seems to refer to cash flow, but it could also be NOI (net operating income).

Doing a basic calculation of the property:

List price of $305k, Gross Income of $600*12*9=64,800. Assumed expenses around 33% of the gross income = 21,384.

I get a cash flow of about $25k. NOI = $43k.

So it seems that the $27k is about cash flow. But you’d probably better ask the owner about the numbers (always a good idea when investigating investment properties).

[Author]

Posts