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It's a simple request for your agent to ask the seller's agent (or the seller) to produce the last 3 years income and expense statements. Any buyer that will finance the sale will need it because the appraiser will ask for it. The seller will have to produce it sometime and in my opinion the sellers failure or reluctance to share this necessary information indicates a red flag. If the income and expenses are supportable, the projected Net Operating Income NOI (not necessarily last years - or the average) divided by the "anticipated sale price" will give you an Overall CAP rate. For this type of property, I'd expect a CAP rate between .06 - .07 for a well maintained & stabilized property to .10 or much higher for a building with vacancies & deferred mainence issues. BTW, it is very rare to find income and expense data reported in the MLS and much of the time the expense data is woefully inadequate. But, that's my opinion.
You are buying the property for the income right?? That's what the lender looks at too! I can't say I know your market all that well but here in my neck of the woods I like to try to stay to $50,000-$75,000 per rental unit to make me happy about the numbers working. There are always variations given the size of the units, condition, income, etc. With purchasng a 6-unit it won't matter a whole lot to the lender if you are staying there or not, they would just consider your income going against that unit.
Thanks for the input. However I would like to know more of the specifics on the lending side. For example how are the rents sized up when applying for a commercial loan? When buying a 2, 3 or 4 family your rental income isnt recognized until after 2yrs by lenders. Is this the same process with commercial loans? Any help on the subject would be appreciated.Thanks
Six Family would be considered a commercial loan. Usually they want more down and the rates are higher.
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