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.
Adam
Comments
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 .
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
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.
