should a newbie buy a multi family as there first property

Question

I have found a 8 unit apartment in my area . the asking price is $310,000 all units are currently rented for 600.

the expenses in this property are $17678. The NOI is stated to be $40822.

This sounds like a good deal but as a newbie I'm not sure and if so How to proceed.

Andrew Lang · Answer

I thought the expenses seem low too. Thank you very body for the tips.

Todd Willhoite · Answer

I am not experienced in multi family, but the expenses sound low.  Does that number include property management %, capital expenditure reserves, vacancy reserves?  How old is the property?  Some things to think about when evaluating true cap rate.

Dustin Beam · Answer

I kinda just jumped into the fire with 12 units and I work a full time job (often with overtime hours).

First, it's possible. If you really believe in the deal, get it. You'll figure out the rest as you go along. I mean, you have a lot of resources right here at BP to answer questions you'll have.

For me, and frankly even after 1.5 years, I still struggle finding the "right people". I have a plumber I like finally. I have a flooring guy that does ok work at a good price. But general maintenance type items...kinda hit or miss. I would kill to have one reliable guy that did all the little stuff at a reasonable price. I don't know that guy (yet). Maybe you don't either, but maybe you do.

If you do think you have plenty of contacts for the maintenance type items, you're in good shape. If not, I would encourage you to keep after that deal and start talking with local investors to see if you can get some names of people that do the work you don't want to at reasonable prices.

If your deal truly is a good price, you have two options if managing them becomes overwhelming. You can hire a good manager, or you can sell them for a profit. A "good" deal should allow you to do both and end up ok.

Brian Brandt · Answer

timely! Working on my first deal as well and put in offers on two different multi family properties today. First is also 8 units with all rented at 650. NOI is 36,000 with good cash flow of about 1,000. Second is a group of 3 duplexes with a NOI of 37,000 cash flowing around 700. I’m nervous but feel like I did my homework. I could be biting off a lot but I still need an accepted offer before I start sweating!