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Rental Property
Posted on 4/1/18 at 4:44 pm
Posted on 4/1/18 at 4:44 pm
Looking at buying two business properties from a relative. These buildings already have renters in them and have a lease agreement till 2020. Having trouble coming up with a reasonable offer though. Does anyone know the percentage of rent to property price I should be using? Thanks in advance
2
Posted on 4/1/18 at 5:28 pm to OakdaleTiger21
find out what the property is worth
find comps, look at appraisals
you want good rent to value but you do not buy with that metric alone. you need to see what is the most you could offer whilst still getting acceptable cash flow and good COC return(organize your offers with that in mind if you are going in low to start). You need to go run all numbers that will be involved. Sounds like you have a lot of work to do before we can help you further.
find comps, look at appraisals
you want good rent to value but you do not buy with that metric alone. you need to see what is the most you could offer whilst still getting acceptable cash flow and good COC return(organize your offers with that in mind if you are going in low to start). You need to go run all numbers that will be involved. Sounds like you have a lot of work to do before we can help you further.
This post was edited on 4/1/18 at 5:48 pm
Posted on 4/1/18 at 7:27 pm to OakdaleTiger21
Are you financing or paying cash?
ETA: WTF are the downvotes for? Cash flow considerations are a pretty significant factor and it was a simple question...”cash or finance?” Sheezamm
ETA: WTF are the downvotes for? Cash flow considerations are a pretty significant factor and it was a simple question...”cash or finance?” Sheezamm
This post was edited on 4/2/18 at 7:08 am
Posted on 4/2/18 at 8:19 am to Mr.Perfect
You have to know the cap rate. Most want to purchase at 10-20% and sell for 10% and under.
There should also be a GRM, Gross rent multiplier for the area
You can use loopnet, or any commercial brokerage site to get a better idea of pricing for the area.
What do they rent for?
There should also be a GRM, Gross rent multiplier for the area
You can use loopnet, or any commercial brokerage site to get a better idea of pricing for the area.
What do they rent for?
This post was edited on 4/2/18 at 8:39 am
Posted on 4/2/18 at 9:12 am to Rust Cohle
quote:
You have to know the cap rate. Most want to purchase at 10-20% and sell for 10% and under.
This. Be very careful OP, why doesn't your family member have an offer for you?
You don't want to buy something just because a decent offer is there from family. Soooo often that works out poorly.
You need to make sure this is something you would buy if it was a 3rd party too. Just because it's an easy property to rent and decent income for your family member doesn't mean what they sell it to you for makes sense for you.
If the family member is really much of a family member, why don't they help you come up with a fair offer?
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