Thread: is this multifamily apartment good?

I saw this multifamily apartment and had some questions im young too, only 16 just wondering about whether or not the person that buys this apartment actually gets 3.4mm a year? that would mean roughly 283k per month. do ppl that buy these actually get that much?

Thank you for your time

Heres the link to the apartment up for sale

LoopNet - Brand NEW 126-Unit Condo Bldg. A REAL MONEY MAKER!, Mid/High-Rise, 120 Beach 26th Street, Far Rockaway, NY

Ik dumb question but just wanted to know

as far as i can tell the whole building is for sale. don't know much about building real estate but 38 mill doesn't seem to bad, but the location is kinda off, NY, so i dont know.

First, you need to be 18 to register the forum and to try to answer your question, yes it's possible to make 3.4M$/year (and a hell lot more) as income from a real estate property. However, the 3.4M$/year number seems to be an anticipated/fictional number as the seller proposes different avenues as to what could be done with the building (rent apartments, sell condos, convert to hotel). You're young, if you wish to get in the real estate business, start now. The younger you start, the more you learn, the more you fail (which is better when young), the higher chances of acquiring success and wealth. All the best.

There is so much more that would have to be clarified before anyone could comment on the expected income it would generate.

But to answer your question, some of the wealthiest people I know (private jet money) made it in big real estate. It didn't happen over night but the snowball grew over time.

That 3.4m is the best possible scenario, thats usually how multi-unit properties are marketed. I bet if you asked for the numbers from the prior year they wouldn't be anywhere near that. But yes it is possible.

they're reporting an "actual cap" that is ACTUALLY a "pro forma" based on future income considering X vacancy allowance. Now, let's say you can realistically achieve a 9 cap. How do I know this? Read the press about this: On the market | The Real Deal | New York Real Estate News

If it can be delivered vacant, there is no such thing as ACTUAL income - it's pro forma.

cap rate - capitalization rate - return on your money.

Calculated by a simple equation: CAP=PRICE/NOI (Net Operating Income; income after expenses)

For this property: $38M/a reported $3.4M NOI = 11.18%

This claims 9% return, so how do you explain the discrepancy?

Here's the ultimate conclusion - a loopnet add can never answer the question of "is this a good deal" - due diligence proves that, not obscured numbers.

Originally Posted by RyanK

That 3.4m is the Net operating income, that means thats without expenses. After subtracting property management fees, repairs and upkeep, insurance, mortgage payment and all the other random expenses you'd probably be extremely lucky to make $500,000 a year.

Number is just completely pulled out of the air, theres no saying what you could make on it, I know nothing of that property's condition or the market in that area, but its just to give you an idea.

What did you just say?

Gross= Before deductions, what a salaried employee's taxes are based off.

Net= After deductions, what a self-employed/businesses taxes are based off.

Net Operating Income= After operating costs, but before tax deductions.

If you deduct your operating costs from your operating income, and it is below zero, or in the negative, you are now using Net Operating Loss. (Claiming a loss on your taxes)

If its used as a apartment/condo, 3.4mm/yr on GROSS INCOME ALONE would necessitate the following;

If all 126 units were ready to rent and they were split evenly down the middle.... (63 1br, 63 2br) Remember, most rentals add ~20% for each additional room

and the following was correct
9% Cap Rate
91% Occ Rate

Then the following would have to be correct;

A minimum of 58 rooms per size should be rented at all times

1br Gross/yr = $1.4mm
2br Gross/yr = $2.0mm

Meaning

1br Per/Mo Per/Unit = $2,011.49/mo
2br Per/Mo Per/Unit = $2,873.56/mo
or
1br (All) Per/Mo = $116,666.42.00/mo
2br (All) Per/Mo = $166,666.48.00/mo

Proving that

1br (All) Per/Mo ($116,666.42) X 12 Months = $1,399,997.04
2br (All) Per/Mo ($166,666.48) X 12 Months = $1,999,997.76

Totaling $3,399,994.80

Now remember, the numbers above are to GROSS $3.4million. Now factor in about 39%-45% for taxes to figure your true Net Income.

At that rate (lets say 42% for all fees/taxes), you would have a net income (NOT NET OPERATING INCOME) of $1,972,000.00/yr.

Now figure out, given those prices per unit, what you would make if you increased your occupancy rating to 98%.

98% of 126 is ~124

So, 62 units/per size (1br and 2br)

1br Per/Mo Per/Unit = $2,011.49/mo
2br Per/Mo Per/Unit = $2,873.56/mo
or
1br (All) Per/Mo = $124,712.38/mo
2br (All) Per/Mo = $178,160.72/mo

Giving you

1br (All Occupied) Per/Mo ($124,712.38) X 12 Months = $1,496,548.56
2br (All Occupied) Per/Mo ($178,160.72) X 12 Months = $2,137,928.64

Totaling now $3,634,477.20, a difference of $234,482.40/yr.

Hope that makes sense.

And I'm tired, if my math is off, **** it

I know my original post was messed up, realized that right after. It's late here in hawaii

You must've had the window open for quite awhile without refreshing it to get that quote this long after

Originally Posted by RyanK

I know my original post was messed up, realized that right after. It's late here in hawaii

You must've had the window open for quite awhile without refreshing it to get that quote this long after

Haha, INDEED! Sorry to nab you like that! Mental math is a PIA!