Buy a Multi-Family 3-4 Units
Hi BiggerPockets,
I am new here. I randomly have read a few forums. I briefly read BiggerPocket "Free Beginner Guide". I also listen to a few PodCasts, while on the road. They are fun and awesome.
I just acquired a Quad Multifamily recently. My closing is on March 7, 2014. It took me about 5-6 months to find it. I picked this property through an MLS. While going through realtor.com, I found this property. I have an agent who sent me the MLS update daily, but it was not fast enough. I don’t think she really knows much.
She does not know the concept of cash flow, cap rate and never helped evaluate a property worth for me.
I am a cash flow guy. It is my priority and equity is secondary. Looking back, it was easy for me to determine cash flow, but I have a hard time determine the value of the house. For example, I don’t know if the house is selling at the market rate or has any equity. I looked over the lender appraisal report, and see how the appraiser evaluated the house worth. It is complicated. He could not find much 4-Fam in my town, so he went to towns close by the used those houses for comparison. He picked 4-Fam with similar living space and number of bed rooms.
Some information regarding the house I just recently acquired:
1)4-Family
2)My wife and I are taking out 30 fixed rate (first mortgage - conventional) at 25% down payment
3)Seller finance (second mortgage)
4)Cash flow after mortgage payment (first and second mortgage), home insurance and tax is about $1000-$1150.
5)Tenants are at will and all four units are staying. I will keep the monthly payment the same for them.
My question is:
How do you evaluate the house worth? How do you determine if the house has any equity? Is there any reliable website that I can use to determine if the house has any equity at the given sale price? I need help – step by step how to perform research and good reference websites.