Multi Family Purchase

6 Replies

I've been looking to purchase multi families in the coming months for positive cash flow. I'm open to all US cities. Where do I start? What market has a decent cost of entry with positive cash flow properties? I've been looking at New Orleans, Detroit, Tampa and Orlando.

Any thoughts.

Joe Fairless's book has a great guide on selecting markets. It's far more detailed than cash flow multiple - job growth, industry diversity, population, unemployment, all that great stuff!

@Natasha Verela you shouldn't be buying properties anywhere for the sake of cost of entry and cash flow. There are dozens of reasons on what market to choose and price point and returns are only part of that. 

Population, population growth, ease of access, resources available, population growth, unemployment, unemployment trend, job growth, job diversity, supply vs demand, median income, education level, local economic development, landlord/tenant laws, etc.

And then a lot of that should not only be applied to the whole market but also the submarket/neighborhood you're looking at too.

Investing anywhere is a risk vs reward, so is the return worth the risk it provides. Thats why NYC and LA are 3-4% cap rates because the risk is much lower than places like Lexington, KY for example. The return SHOULD be higher there, but the likelihood of losing money there is greater so they have to balance out. 

Understand what your investment goals are, then back into what metrics you want to see from a market, then find the markets that fit or are closest.

@Natasha Verela I would say it very much depends on what your investing goals are. As a beginner I would focus on markets that have great cash flow which means your are probably going to be looking at tertiary markets in the mid-west and southeast. Any metro with a population over 1 Million is going to be very saturated with institutional investors and therefore very hard to compete in. I would focus on markets with population in the 200k-500k range with positive population and job growth. @Chris Grenzig mention of Lexington, KY would be a great example of a tertiary market in the southeast where you can still find cash flowing deals.