Advice for a new investor interested in multi complex

[Samuel Dumond]

What are some essential step In you guys professional opinions should a new investor take once finding a possible deal?!

I am very curious to know, if you guys could walk me thru the process it be very appropriate.

[Guifre Mora]

Originally posted by @Samuel Dumond:

What are some essential step In you guys professional opinions should a new investor take once finding a possible deal?!

I am very curious to know, if you guys could walk me thru the process it be very appropriate.

 1) Rental Property Cash Flow Analysis- Due Diligence: 

a) The first step to buying a multifamily home is deciding on the right neighborhood to invest in.

b) Property condition: Take into account how much time, money and work the property will need in order to be rent-ready. 

c) Rent roll: Look at the current rents and compare them to the average rents in the area to see what the property should rent for and can help influence your buying decision.

d) Revenue & expenses: Look at what rental revenues are coming in and what the current expenses are and see if it makes sense, remember to add in your approximate carrying costs to see if you will be cash-flow positive.

e) Vacancy rate: Look for a vacancy rate below 10% and see how long each unit is vacant per year so you can figure that into your carrying costs. 

f) Loan calculation: Add your loan calculation into your Analysis.

2) Work with a RE agent.

3) Choose the Right Lender. Rates: Compare rates between lenders and choose the most competitive one. Terms: Pay attention to the terms, some loans like hard money loans offer short terms of one to three years and others may offer long terms up to 30 years. Areas covered: Make sure the lender lends in your state. Property condition allowed: If you’re buying multifamily that needs to be rehabbed, make sure the lender offers rehab loans because not all lenders offer them

3) Make an Offer. 

Things to consider when setting your budget are:

• Closing costs: Generally 2% to 6% of the sales price of the property and include lender fees, title insurance, property insurance, lender points, and property taxes. The higher the sales price, the higher your closing costs
• Carrying costs: Monthly recurring costs including your mortgage, taxes, insurance, and utilities
• Renovation costs: Consider how much you need to spend if the multifamily property needs to be rehabbed prior to renting it out
• Ongoing repair costs: These are variable costs and may pop up anytime something needs to be fixed
• Timeline: Your timeline is directly related to our budget and the longer a renovation takes, the higher your carrying costs are.