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Multi-Family and Apartment Investing

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Shawn Blake
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Strategy for multi-family investment

Shawn Blake
Posted May 13 2024, 19:01

New investor and considering a multifamily investment. The property is 2 units and a 3 story townhouse. I would be purchasing with an FHA loan, how do i assess if the deal is worth it?

The property comes with one unit occuped and they are paying below market rate. If my strategy is to have their rent pay part of the mortgage and invest in renovation in the unit i'd occupy, does this sound like a good strategy to raising the value? I'd even be open to airbnb a room since there are 3BR. Trying to understand how investors assess whether something is truly a good deal as its being advertised. 

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Kyle Gardner
  • Developer
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Kyle Gardner
  • Developer
Replied May 14 2024, 07:26

Overall, great idea. You need to underwrite the properties. How much money will you make following the methods you're suggesting? Consider all revenue and expenses and calculate best and worst case scenario. Then decide if it's worth your time and investment. Feel free to message me to discuss further. 

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Greg Kasmer
  • Rental Property Investor
  • Philadelphia
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Greg Kasmer
  • Rental Property Investor
  • Philadelphia
Replied Jun 5 2024, 09:23

Shawn - I would suggest you develop a pro forma based on the stabilized state of the property to understand if it cash flows once all units are occupied being sure to include all reasonable revenue assumptions (rents, vacancy factor, etc..) as well as expenses (debt payments, maintenance, utilities, property management, taxes, insurance, turnover costs, etc..) Once you have an idea of the cash flow in the future state you can then spend most of your time determining the funding for renovations to get the property to that point. Good Luck!

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Drew Sygit
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  • Property Manager
  • Royal Oak, MI
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Drew Sygit
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Replied Jun 6 2024, 04:57

@Shawn Blake figure out what each of the units would rent for and then compare to your PITI payment.

Ignore the fact that you are living in on of the units for the analysis.

If you can STR one or two of the bedrooms in the unit you live in, it will add to your revenue.

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Adam Bartomeo
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  • Real Estate Broker
  • Cape Coral, FL
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Adam Bartomeo
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Replied Jun 6 2024, 05:38

Revenue - expenses = profit

You would have to divide the expenses in half because you will be living on one side. 

Rehabbing one side while living in it is a good idea. Then you should turnover the other unit and move into it so you can rehab that side.