A topic posted @ 群 组(投资理财 » 房市夜话) on 2008-02-05
Following cultuslake to find projects...
How about this:
"26 Individually titled condos, currently bring in $180,000 annually in rent. No vacancies. "
Ask 1.35m. Built 1965.
Location is very convenient, so they are easy to rent out.
Let's do some calculation:
rent $550 (average $577, minus about 5% vacancy)
management $55 (10%)
maintenance $55
Total income $440 (per unit)
mortgage principle & interest $316
property tax $58 (a sample unit tax listed $690 annually)
insurance $50
Total cost $424
So a slightly positive cash-flow ($16 per unit). With $46 mortgage principle . The total profit $52 x 26 = $1352 per month.
In a slow growth area. Based on condition, there maybe a one time maintenance/remodeling cost.
Do you think it's worth of so small gain for such a big project?
Comments? Suggestions?
Discussions:
>> cultuslake: Definitely worth exploring.
>> jy101: few more things need to consider here, the property is approching 40 years old, when was the last complete update, including electrical, plumbing, heating, water and paint(lead base paint)? and also when you involve with a complex, who is responsible for basic services like water, sewer or trash? will you have onside management?
The project sounds doable, but plesae don't rush into it. study it more in detail
>> 4008: Thanks. Estimate calculation was just based on the ads & zillow. Will contact seller for more info.
>>montavista: 1.35M for 25 units, the unit price would be $54000. As they have separate title, you can easily sell them as individual condo. What's the market price for condo with comparable condition? If there is big margin, I will consider doing condo conversion. It worth condo conversion is profit is 20% and more.
However I suspect the seller already priced in condo conversation profit. You may be able to negotiate the price down if the market is not hot and seller can't sell it quickly.
>>4008:Even if it's priced as condo, it will be at the lowest end (so there is potential for capital appreciation if holding for a few years or after some remodeling).
>>4008: Question for cultulake:
When you do the condo conversion project, do you make one loan from bank, or individual loans for each unit separately?
Loan agent says if one loan, you can not sell the units separately, but doing individual loans will costly (closing cost etc.)
>>cultuslake: One loan for all. You can sell one by one, when one is sold, that part of the loan is discharged.
You need to find a commercial banker for the loan.
