This is a six unit building on Laclede with the Park East Tower to the east and Forest Park to the west. Each unit has approximately 1100 sq. feet, two bedroom and a finished porch off the kitchen.
Gross potential income at $900 a month per unit=$64,800.00 less vacancy at 5% ($3240) less yearly debt service ($38,328 with purchase price of $600,000, 20% down, 30 year fixed at 7%)
Gross Operating Income of $23,232.00
Net Operating Income of $13,232
Capitalization Rate of 2%
(Taxes are just under $4000, Insurance was estimated at $3000 Utilities and Misc estimated at $3000). To learn more about NOI click here or Cap Rate here.
This is a superior location close to the park, BJC, Metrolink, universities and all the amenities of the CWE. Seemingly you would have your choice of tenants. But a cap rate of 2% is terrible. Things to help ensure a better cap rate would be a lower sale price, a higher down payment or a better interest rate.
October 8th, 2008 at 7:23 am
Sorry, but that is not how you determine the cap rate or NOI - it has nothing to do with down payments or interest rates. Email me and I’ll walk you through it. Also, your expenses are definitely on the low side. Feel free to erase this post . . .