Multifamily: Cashflow... What Cashflow. Whats the deal?

[Rory Galvin]

Hi All,

I've been looking for a multifamily property to get my REI career started.

I have analyzed about 100 supposed 'income multifamily properties' in many of the metropolitan areas in the northeast. I have been unsuccessful in finding any that cashflow. None of the properties came close to the 1% or 50% rule. I'm think maybe we are too far into the cycle for this type of investment to make sense as property prices are too high?  I found a fourplex that might have broken even, but was 40 years old and needed a new roof.

Multifamily remains a really popular investment. During the search period, I saw a number of 'income properties' sell (properties I was interested in) that didn't come anywhere near to cash flowing. 

The question is why do people continue to invest in them? Particularly old properties that are a maintenance time bomb? Are these people

- Househackers - living on one floor, renting the others?

- People with lots of cash that need to park it somewhere?

- Interested in main capital appreciation?

- Poorly educated investors?

Love the forum!

Thanks,

Rory