Distressed Multi Units - Suddenly what was once a play that made no sense because of over priced properties relative to Rent Roles are now not only back to reality, but are great investments.
A great deal out there are short sale and bank owned multi units. Many urban areas across the country are experiencing serious blight on the community because of vacant buildings. An empty apartment complex can be a hazard as well as an opportunity for the savvy investor.
In Lewiston, Maine a former bank owned 4 unit apartment building recently went on the market for a paltry $39,000. What was once valued heavily over $100,000 only 2 years ago, is now being given away at the price of a brand new Hummer. Given that the property is in a decent area with similar units getting roughly $500-600 per month in rent, it doesn't take a math genius to see the positive cash flow.
What's a capitalization rate? In a nutshell, it's Real Estate lingo for a Rate of Return. Take the Gross Annual Rental Income from the property. If said property receives $500 per unit, that equates to $2000 per month in rental income and $24,000 per year. If the initial investment is $40,000 that would give the investor a Capitalization Rate of 48%!
What other investments are giving out 48% Rates of Return, while providing the security of a tangible asset as well as tax write-offs? Like all investments there is inherent amounts of risk, like being a landlord to multiple tenants, dealing with periods of vacancy as well as property destruction. But if you're ready to be a landlord, find some bank owned and short sale Multi-units. Its all about the #'s!
A great deal out there are short sale and bank owned multi units. Many urban areas across the country are experiencing serious blight on the community because of vacant buildings. An empty apartment complex can be a hazard as well as an opportunity for the savvy investor.
In Lewiston, Maine a former bank owned 4 unit apartment building recently went on the market for a paltry $39,000. What was once valued heavily over $100,000 only 2 years ago, is now being given away at the price of a brand new Hummer. Given that the property is in a decent area with similar units getting roughly $500-600 per month in rent, it doesn't take a math genius to see the positive cash flow.
What's a capitalization rate? In a nutshell, it's Real Estate lingo for a Rate of Return. Take the Gross Annual Rental Income from the property. If said property receives $500 per unit, that equates to $2000 per month in rental income and $24,000 per year. If the initial investment is $40,000 that would give the investor a Capitalization Rate of 48%!
What other investments are giving out 48% Rates of Return, while providing the security of a tangible asset as well as tax write-offs? Like all investments there is inherent amounts of risk, like being a landlord to multiple tenants, dealing with periods of vacancy as well as property destruction. But if you're ready to be a landlord, find some bank owned and short sale Multi-units. Its all about the #'s!
Marty Macisso is a Maine licensed Realtor, specializing in Short Sales and Bank Owned properties for investors and sellers. View his site www.MartymyRealtor.com for opportunities in the Maine real estate market.
