Expert: Matt Heisler - 10/6/2007

Question
Hi Matt!
We were very interested in a multi unit property about 55 steps from the beach.  It has 3 units.  We have done investments one time before for a VERY brief period in Amesbury and did tenant at will.  We just found out today the property is bank owned, so we cannot get our hands on ANY history.  

How can we potentially judge what we may be able to generate on this property?  I know the taxes are around $4000 and we want to offer $300,000.  The assessment is 483,000.  There are two very small units and then a larger house out back.  Is this just bad all around or a potential diamond in the rough?  There is small damage on the inside due to the previous owners not happy with the bank coming in.  There was a divorce.

Any insight you could give would be GREAT!!  Thank you.  

Answer
Hi Maryann -

The answer is simple - get a knowledgeable Realtor who does investment property.  They should be able to tell you what the rents will be.  In lieu of that, you can check out the paper or craiglist and view other rental properties to determine potential rents.  Unless the property is clearly a vacation/summer rental, I would expect a modest premium in rental income (most tenants are looking for affordability, not beach access).

I can't tell you what the rents might be because Salisbury is out of my area, AND the most important factors are size, bedrooms, layout and of course, condition.  Once you determine the rents, figuring out cash flow should be pretty easy.  If you're not sure, get an expert!!  It's too expensive to guess.

Matt Heisler