Market Conditions in 02478>Question Details

Bb, Home Owner in 02478

I own a 2 family in Belmont are you selling these type of homes subject to 1-3 year leases? What is the CAP rate for such properties?

Asked by Bb, 02478 Sat Aug 4, 2012

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The question of selling the property subject to the 1-3 year lease is totally negotiable. A buyer of a 2-family who wants an investment property would be more likely to WANT a property with tenants who are paying, upstanding, and have been in the property for a while. It makes it a better investment for them since those tenants are likely to stay and pay.

Then again, you may find a buyer who wants to live in one of those units, which means the tenant would have to vacate, which could pose a problem to the buyer. Leases go with the property. So the tenant has the right to stay. In that case, it doesn't matter how much the seller and the buyer negotiate, the tenant ultimately has the right to stay. It DOES matter, however, how the buyer and the tenant negotiate. If the tenant and buyer can come to an arrangement -- in writing, of course -- so that the tenant can find a suitable place to live prior to closing, possibly at the buyer's expense, then perhaps now you have a great deal for all involved: buyer, seller, AND tenant.

The cap rate will be Net Operating Income divided by the Purchase Price. So if you are getting $42,000 per year in rent ($3,500 average for 12 months), and your expenses are running about $23,000 (55%), you have a Net Operating Income (NOI) of $19,000. With the median price of 2-fams in Belmont being around $600,000, you're looking at a CAP Rate of 3%.

I'm happy to talk about this further with you, Bb! Email me at russb@kw.com.

Russ
1 vote Thank Flag Link Sat Jan 5, 2013
I am looking to buy 2 family in Belmont for myself. Pls call me at (617)595-1917 or email me at suelai0408@gmail.com. Thanks, Sue
0 votes Thank Flag Link Sat Mar 30, 2013
If I understand what you are asking... The sale of a property can occur with a lease in place, as long as you find a buyer willing to buy the property with the understanding that there are/is a tenant or tenants with a valid contract. Of course, there is an option, you or the seller could buy out the lease and help relocate the individual(s).

Please contact me should you have any other questions or if this was not the answer you were looking for.
Web Reference: http://www.jamestrano.com
0 votes Thank Flag Link Sat Dec 8, 2012
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