Found a multifamily investment property - worth a deal?

Question

Hello, I found an investment opportunity... it's a duplex/triplex offering a total of 5 rental units. All are currently tenant-occupied. It is located in Lexington, NC. Each unit is individually metered for power and water. Each unit is rented right now for $500/month. The seller is asking $500k... Before I negotiate, is it worth looking into this? I've never owned a duplex/triplex unit as a rental. Let me know your thoughts please.

Colby Fryar · Answer

@Shayan there are a lot of steps to go through here. First of all, I'm assuming you are familiar with the area and the demographic. Also have you done any pre-dd- driveby, discussions with broker, property managers and other real estate professionals about this property. Assuming you have done those, understand the area and the demographic and hopefully have some idea of the financials for the property, then you need to underwrite the deal.

If you do not have experience with this, I would highly recommend getting advice/assistance from someone that you trust in the business. If not, pay a coach or mentor to help navigate through the process. So many people think they can jump into this all alone, but they end up paying a heavy price most of the time. Let me know if I can be of any help to you.

Sai Vipparla · Answer

@Benjamin Aaker I'm wondering the same thing! Went to go buy it but could only find the millionaire real estate investor.

Jay Fayz · Answer

Do you mean "the millionaire real estate investor" by Gary Keller?

Shayan Sameer · Answer

These are all great advice. Thank you, everyone. I'm running away from this deal. LOL, math doesn't make sense.

Bill B. · Answer

If you put the minimum of 25% down, that’s $125k. Do you have $125k? If so, and you get a reasonable 7% loan on the $375k your payment will be $2496/mo. So as long as your insurance, property taxes, property management, utilities maintenance, repairs, vacancy, and capex come to $4/mo or less you’ll be fine. And if they all add up to zero, you’ll earn 0.038% on your money

Or you could put the $125k in the bank and earn a government guaranteed $520/mo. I know which one I would take out of those two choices. Now you see why the seller is selling. He can put your money in the bank and earn $2,100/mo instead of $4 or less.

Jonathan Greene · Answer

It's clear from your post, and the limited information you put in there, that you are out ahead of your skis here. There are a million things missing from this for anyone to even give you the smallest amount of advice on what to do.

Where are you located? How did you find the deal? Do you own any other real estate? Have you seen it in person? If no, are there photos of each unit and all closets, the basement, the roof, the exterior, and all mechanicals?

And lastly, how would this deal work? Your total rent is $2,500 on a $500,000 purchase price which would be 1/2 percent rule. That would be terrible.

Found a multifamily investment property - worth a deal?

Found a multifamily investment property - worth a deal?

Most Popular Reply

9 Replies