Property Analysis February 2009
Today we’ll take a trip to Schenectady, New York and take a look at a 4-plex for sale.
In case the listing is missing, let’s sum it up.
- Asking Price: $219,900
- Rental: $600 per unit ($2400 total)
- Utilities: Included with Rent
- Fully Rented
Just by looking at the preliminary numbers, I was excited to have found a property that would cashflow. With a mortgage payment of about $1300, the other expenses would be easily taken care of by the remaining $1100.
Then I noticed the taxes were listed. $7,148. This breaks down to $545 per month.
An expense of $545 per month will kill this as a potential investment property. Running the numbers in the Business Modeler verifies this (Scenario 1).
The only way this property would make sense is if the sellers came down $50,000 on the asking price. Is that realistic? One could argue that it never hurts to try. But $219,900 is not out of line with other properties for sale in the same area. From there, it’s a question of motivation by the sellers. Just how bad do they want to get rid of this property?
The big elephant in the room is the taxes. The $545/month lead weight sinks this deal.
Conclusion:
This property was dismissed not because of poor construction or bad neighborhoods. But rather the deal doesn’t work because taxes moved it out of the possibility category.
Skip this one. Time to hunt for another.
Find this useful? Please give it a thumbs up!
Comments
No comments yet.