investing/renting apartments?

Donte Hamme: Carl;First of all, congratulations on taking the first step towards investing in multi-family properties. When done properly, this type of investing can lead to substantial cash flow and wealth over time. When done improperly, however, you can lose your shirt.I personally have been investing in apartment buildings/commercial real estate for over 13 years now, and it has been very good to me financially.Unfortunately, with the little bit of information that you have provided, I cannot comment specifically on whether or not the deal you are contemplating is a good one or not. What I can do for you is give you some tips for further analyzing this deal and/or future deals. Let's get started...1. Look for properties that you can add value to. I think the above deal may provide this opportunity. I suggest that you work backwards in order to figure this out.2. Determine what the property will be worth once it is fixed up and fully rented. (ask a real estate agent fo! r comparables or "comps" to find this out)3. Determine what it will cost to "repair" the property. Regardless of whether or not you plan to do the repair work or not, you must calculate the cost as if you were going to pay someone else to do the work.4. Subtract the repair cost from the after repair value and that is the most that you should pay for the property. Of course you will want to negotiate a much better price than this. Given the condition of the property you describe, I think you can do this.If the deal doesn't work based on these big picture numbers, move on. If the numbers do look attractive, move on to the next stage of analysis which is constructing an "APOD" or Annual Property Operating Data.Sidebar: I always recommend constructing your own APOD even if the seller provides you with one. In your case you will have no choice as the property is not "operating". 1. Determine the market rents for the units. From this determine your annual gross potential income.! 2. Determine an allowance for vacancies and bad debts, say 5%.! Again, gather your own data on vacancy rates in your city/neighborhood.3. Gather all of the expense numbers associated with the property. Put it right in your offer that the seller must provide you with all the expense receipts for the past 3 years for the property. Ex. property taxes, electricity, insurance, gas/oil, cable, etc. Again, because the property is vacant, you are going to have a tougher time determining operating expenses, but give it your best shot. Make sure you allow for ongoing maintenance and future capital expenditures (new roof, hot water tank etc.) Expenses on a four-plex can easily run in the 50-60% range of gross income, especially if you hire a property manager.4. Subtract your vacancy/bad debt allowance from your gross income, and then subtract your expenses from that figure. You will be left with your projected NOI (net operating income). This is the actual cash you will have left over to pay your mortgage. It sounds like you have enough cash for ! a healthy down payment which is good. This will make it more likely that the property will throw off some positive cash flow.Other tips:1. Make sure you have a contingency fund set aside for unexpected major repairs.2. It's going to take you some time to fix the place up and get it rented. Allow for this in your cash flow calculations.3. If you plan on doing the repair work yourself, consider attending "classes" at your local Home Depot. You may have to hire an electrician and plumber for some of the work but things like painting etc. you can easily do yourself.4. As far as managing the property goes, a four unit building is a good size to learn the ropes with. It's a good idea to understand how to properly manage a property before you hand it off to a third party.5. Educate yourself. Go to your local library and look for books on investing in apartment buildings and smaller multi-unit properties (2-4 units). As well, you may wish to visit my website http://www.apartment-bu! ilding-real-estate-investme... where I share my personal successes (and! failures) in this business.Good Luck Carl....Show more

Ayesha Genova: Having been a landlord for 14 years I wouldn't recommend it to anybody except my enemies. You need lots of help and I think you should stay out of that business.

Ronnie Barcus: Rent-To-Own Home : http://RentToOwnHome.uzaev.com/?ZRMo

Janeen Perona: Before you buy, you should get advise either from a trustworthy contractor or possibly a property management company on exactly how much it will cost to get the property in condition suitable for renting.That amount becomes part of your investment. That plus the 50 percent down becomes your total up front investment.Your return will be equal to the rent you collect less the expenses associated with maintaining the property and less the mortgage payment, principle and interest.There may also be business taxes that you have to pay and you may find yourself having to deal with zoning laws etc.If, say, you put 50K down and it costs 20K to do ini! tial repairs, then your investment is 70K.If you get 750 a month from each apartment and you have 90 percent occupancy, then your gross revenue will be 750 *4*12*.9 or about 31.5K. If your mortgage payment is 2000 a month and expenses associated with maintain the property are 250 month then your expenses during the year 27K. Your net profit will be 4.5K on an upfront investment of 70K. That's about 6.5 % rate of return. Plus you are going to--hopefully--gain as the building you are buying increases in value.There are so many variables. What is the neighborhood like? Is your city growing and prospering? I will note...I work for a Property Managment Company...that you can get somebody to do all the work associated with the property, finding and vetting tenants, scheduling and overseeing repairs etc, for from 8 to 10 percent of the gross rent.You might want to look into that.(the financial analysis presented above is simplified and for illustration only...but you should! go through that exercise to see whether it is a good investment.)...Sh! ow more

Ariel Arons: sounds like it is in the jungle. it depends on how much rent you can get when it is presentable, occupancy, maintenance, etc. if they get 500 a month, i wouldn't pay more than 125,000 a month because there is probably no hope for capital appreciation in that area

Mikel Bethay: Put the minimum down to have cash for the repairs. It's likely to be a money pitSo many people get involved in property management that don't seem to have a clue about the pitfalls that are possible. I suggest going to www.amazon.com and typing "landlording" in the search window. The last time I did that I got 200 hits. You can look at the reviews and then go to your library and see which ones they have....Show more

Cherry Stampka: Didnt you just answer your own question with the last line you wrote? If you want to get into this Id recomend starting with something thats NOT in terrible condition.