Pricing multi family homes up to 4 units

4 Replies

I’m fairly new to BP and the idea of real estate investing in general. I’ve been listening to a lot of podcast and reading the forums when I get a chance. I really like the idea of a small multi family rental. What are the best ways to evaluate a multi family property to see if the price is reasonable to be able to cash flow. Do you use a certain formula? Looking for B-C type of buildings.
@Brian Bertschi Use the buy and hold BP calculator. It’ll walk you through it, to include expenses. Get rent rolls from seller. If you’re going to live in a unit (house hack) make sure you also evaluate numbers as if all units are rented.

@Brian Bertschi

Tools/Rental Property

Without a Pro membership you should be able to get 5 free calculations. 

Also, search webinars with Brandon Turner. He gives demonstrations on using the rental calculator. It is very important to not forget capex, maintenance, vacancies, and management expenses (even if you'll be your own manager, you may not be forever). I'm no expert like many on here, but, capex can be tricky in my opinion. For example, my duplex has brand new HVAC's on both sides, and a roof thats 5 years old. So capex isn't a huge worry for me. But I still set aside 5% of gross rents per month in a reserve fund for future capex. (Full Disclosure here; I don't actually spend any of my net income, so I actually set aside 100% of my net income for future expenses, retirement, or another rental property purchase). And I'm only 4 years from early retirement, so real estate will not be replacing my full time W2 job.