NJ Multi-Family Income Property of the day

As I was browsing potential investment property for a client today, I came across a building that I though I should share.  I am seeing a few of similar deals out there, so if you are looking for investment property in northern NJ, we are on the pulse of things. 

Our Income Property of the day is in Heights section of Jersey City only approximately 1 mile west as the crow flies from say 13th & Hudson in Hoboken.  It’s a 6 unit residential building with brick all the way around.  The apartments have tile and wood floors.  Public transportation is just a few steps from this building and the rental history has been near perfect over the last 5 years and currently has an Annual Gross Income of $64,000.  On my way out today, I drove by the building and it looked in great exterior condition and after calling the sellers’ agent, found out the interior had extra large rooms, nice bathrooms, and in impeccable condition.  (He said you gotta see it to believe it so until I do, I’ll take his word for it)

So to not bore you, I will get to the details, and if you would like to see this property, please contact us for an immediate showing.  I do not think this one will last long in my opinion given the recent reduction in asking price to under $520,000.  The investment potential with this building looks good and may need a bit more due diligence, but comfortable in knowing that a deal can be had here.

Price:                                $520,000

Taxes:                              $7,772

Insurance:                     $3,700

Miscellaneous:            $5,000 (covers vacancy factor + minor repairs if necessary)

If you are a cash buyer, great!  If you are a financing buyer, the best Loan To Value (LTV) you will likely get on an investment building loan would b 65%, meaning you will need about 35% as a down payment plus your closing costs.  For the sake of this article, let’s assume your loan rate and terms are as follows:  5 Year Fixed Amortized over 30 Years with a interest rate of 5.75%.

 Taking the numbers above into consideration, here is what the banks and investor minds want to know:  Your annual income is $64,000 off rental income.  Your operating expenses which include our taxes, insurance, and miscellaneous comes to $16,472.  If you subtract your Operating Expenses from your annual income you get a Net Operating Income (NOI)of $47,528.  The $47,528 would be what you will take home in income before taxes per year.   If you divide your NOI by your purchase price of $520,000, you get a Capitalization Rate of nearly 9.2% a comfortable number for investors of multi-family investment buildings. 

If you are financing 65% of the $520,000 or $338,000 (principal amount after down payment), you will have a monthly debt service of about $2,220.  Your monthly income on the property of $5,333 will give you a monthly surplus income of $3,113 or annual income of $37,356.  After paying your operating expenses of $16,472, you are left with an annual Cash Flow of $20,884, almost a 20% annual return on your investment dollar for dollar. 

Now that I have you a little excited, get in touch with us and set up a showing.  This building would look good in your portfolio.  A great opportunity for Jersey City real estate

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