$100 Cash Flow Per Unit Per Month

Is $100 cash flow per unit per month good enough for an apartment building?
In Buying Property - Asked by James S. - Jan 7, 2014
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Answer(s)

Caren K.
Broker/Agent
Jersey City, NJ

Depending upon location.

Jan 8, 2014
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minaz s.
Owner/Investor
Calgary, AB

No it's no good.

Jan 8, 2014
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Kenneth M. J.
Broker/Agent
Fresno, CA

Many factors. What is your initial investment? Will the property require management intensiveness? In need of repair? If so, how much $? Will you repair or hire out? The answer is subjective--analyze the property and your initial investment--downpayment plus closing costs and divide that into your NET cash flow,using an annual projection/annualized. The % is your yield. i.e Would you want to invest $50,000. and yield $1,200. a year, equivalent to 2.4%. Can you repair, flip it and earn a (subjective) good return? Or better for long term retirement? Learn about applying Cap Rates - N / V = R or inversely N / R = V. Essentially, does the projected net justify the initial investment. Never mind what other's think. Is the money you expect to earn make you happy? Don't base on or expect appreciation--if it comes, fine. Analyze the property on it's current and potential merits or personal usefulness. Ken J.

Jan 8, 2014
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James S.
Owner/Investor
Mount Olive, IL

how much cash flow is good enough? considering 25% down.

Jan 8, 2014
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Jonathan O.
Property/Asset Manager
Clifton, NJ

Yes, this cash flow would work, after you factor, of course, all expenses, debt obligations and there is enough units to substantiate $100/unit per month. At 50 units then you're looking at $5k a month ($60k a year).
Personally, I would want to see higher cash flow for smaller units. The key is that you don't overlook any expense when working with a lower margin.

Jan 9, 2014
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Todd T.
Broker/Agent
Fresno, CA

How much cash invested, how many units - are ALL costs factored in - future maintenance costs?
This sounds a bit skinny – But it depends on how solid that number really is and how it contributes to the real after tax cash flow.
Sounds risky to me

Jan 9, 2014
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Zachary S.
Broker/Agent
Cincinnati, OH

If I asked, "Is $10,000 a good price for a car?", what would you say? Likely, that it depends upon the make/model, age, repairs, etc.
The same is true in this situation. You need a lot more info before knowing whether that's "good."
What kind of units, what kind of rents, and where? What was/is your purchase price? Do you live in an area with 4-5% caps or 10-12% caps? Are your rents $400/month or $4000/month? Is the building old or new, good condition or bad? Knowing your motivation (is this a potential purchase or a building you already own?) is also important.
While cash flow is important you also have to judge on a % return (cap or IRR) compared to market.

Jan 9, 2014
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Brenda S.
Broker/Agent
Temecula, CA

Sounds a bit risky no matter the location. Does not leave much security for market changes and vacancy factors. Would be to tight of an investment for me.

Jan 9, 2014
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James S.
Owner/Investor
Mount Olive, IL

Thank you for everyone for response.
So, here are some of the detailed.
24 unit apartment building, each unit is rented for $550, all separately metered and paid by tenants, trash and lawn care paid by the owner, property management @ 10%.

In terms of financing 5.25% fixed for 5 years, amortized over 20 years with 25% down.
After all expenses and PITI, cash is about $2400 per month which means $100 per unit per month. Is that good investment?

Jan 9, 2014
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Dalip S R.
Broker/Agent
Arlington, TX

It might be ok in the beginning but should have potential to increase. Bottom line is more units more overall cash flow. 100 unit x $ 100= $10,000, or 10units x $200=$2000. Good luck.

Jan 10, 2014
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Zachary S.
Broker/Agent
Cincinnati, OH

"Is that good investment?"
At what price?

Jan 13, 2014
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James S.
Owner/Investor
Mount Olive, IL

Price is irrelevant now as I had already indicated of putting 25% down. By providing all the figures, I wanted to see if $100 per unit per month was a good enough cash flow. Of course cash flow means all the expenses plus piti are already taken out. So does it matter what price will I pay for it?

Jan 13, 2014
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Jason T.
Broker/Agent
Green Bay, WI

We don’t really have all the info we need. Are you budgeting for maintenance& vacancy in that number? Is there much deferred maintenance? Are the rent top of market? I’d advise you to work with a local professional. Even if you provided all the info need. I have no idea what comparable properties would look like in compassion.

Jan 23, 2014
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