15 unit asking 2.5m!!! Can a newbie do it?

Cleveland, Ohio
Multi-Family and Apartment Investing
1yFollow

15 unit asking 2.5m!!! Can a newbie do it?

Andrew K.
Avon Lake, OH · Member since 2015 · 14 posts · 4 votes

I have been looking and found a nice 15 unit building in a solid neighborhood! Problem is I haven't done any deals yet. Going over how could I get this done? Any ideas?! Net income is around $120kyr. Rents are about $18k monthly. Does this seem doable?

1Reply
57 views

Most Popular Reply

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Andrew K.:

I have been looking and found a nice 15 unit building in a solid neighborhood! Problem is I haven't done any deals yet. Going over how could I get this done? Any ideas?! Net income is around $120kyr. Rents are about $18k monthly. Does this seem doable?


 Do you have $500k for the down payment? Do you also have another $150,000 in reserves? IF not, then the answer is no. While someone may say try and get it owner financed etc for less, do not do this.

I would also expect to take a lot of lumps along the way.

7e investments53 Reviews
WebsiteView Page
7Reply
See this reply in the discussion

24 Replies

Jump to latestLatest
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 926 votes
    1y

    That’s a big first deal, but it’s definitely doable with the right approach! Have you looked into creative financing options like seller financing, partnerships, or securing a commercial loan? Also, make sure to factor in expenses beyond net income—maintenance, vacancies, and management can impact cash flow. If the numbers check out and you have a solid plan, it could be a great opportunity! Feel free to reach out if you have any questions? 

    [email protected]614-418-6081
    1Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Arman Ahmed thanks for you input! The numbers I have are from a profit loss statement it included all expenses and vacancies. Do you have experience with deals like this yourself? I personally would doubt I could find 30% down on that. I believe commercial loan would expect 25-30%. They said the have an assumable loan at 4.1% $1.5m. Not even sure how that would work. 10yr fixed loan. 

      0Reply
    • Arman AhmedPro Member
      Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 926 votes
      1y

      @Andrew K. 

      That assumable loan at 4.1% could be a great opportunity, especially in today’s rate environment. If you can assume that $1.5M loan, you’d only need to come up with around $1M for the rest—so the challenge would be structuring the remaining capital. You could look into bringing in partners, raising private capital, or even negotiating seller financing for part of it. Have you explored any creative ways to bridge the gap, or are you mainly looking at traditional financing?

      [email protected]614-418-6081
      0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Andrew K.:

    I have been looking and found a nice 15 unit building in a solid neighborhood! Problem is I haven't done any deals yet. Going over how could I get this done? Any ideas?! Net income is around $120kyr. Rents are about $18k monthly. Does this seem doable?


     Do you have $500k for the down payment? Do you also have another $150,000 in reserves? IF not, then the answer is no. While someone may say try and get it owner financed etc for less, do not do this.

    I would also expect to take a lot of lumps along the way.

    7e investments53 Reviews
    WebsiteView Page
    7Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Chris Seveney  Definitely not the fun answer I was hoping for but I definitely appreciate the advice! Sometimes you need someone to smack your hand away when you're reaching! 😜 It such a great neighborhood though! 

      1Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Chris Seveney  other than the obvious problems that you pointed out! Do you feel that first glance those numbers would be a good deal for someone? I feel you have WAY more experience then I do! 

      0Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Andrew K.:

      @Chris Seveney  other than the obvious problems that you pointed out! Do you feel that first glance those numbers would be a good deal for someone? I feel you have WAY more experience then I do! 


      With $120k NOI that is 5% cap. Unless this is in a Class A area where occupancy is always near full and a place everyone would want to live or own then no. Typically cap rates for this are major city cap rates and larger buildings. If this is in cleveland, I doubt there are many 5 cap properties in cleveland.

      7e investments53 Reviews
      WebsiteView Page
      0Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Chris Seveney it is in an upper middle class suburb of Cleveland. Single family homes range from $300k to $1m plus. I'm seeing that the asking price is high so I might watch it for a bit. 

      0Reply
  • Jace Perry
    Investor · FL · Member since 2017 · 134 posts · 66 votes
    1y

    This is not a good deal to start with. 

    2Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    1y

    That rent is real low for that purchase price. Is it way below market?

    1Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Jill F. I have a feeling rents could go up but also asking price is a bit high. In your opinion what would a decent offer be on something with these numbers? I know just enough to get me in trouble so any input from the experts is greatly appreciated!

      0Reply
  • Allan C.
    Rental Property Investor · Member since 2018 · 826 posts · 810 votes
    1y

    If this is your first deal you also need to realize that proforma seller P&L statements are always wrong. Expenses are always left off to juice the NOI for unsuspecting buyers. Spend some time to understand how to underwrite a deal. Look at numerous listings and see components of opex that different sellers include, and you'll start to get a better picture.

    also don't forget to include a reasonable vacancy number, and also include capex!

    5Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1y

    @Andrew K.

    can you house hack a 2-4 unit instead?  that is the best way to get started, period, full stop.

    4Reply
    • Andrew K.
      OP
      Avon Lake, OH · Member since 2015 · 14 posts · 4 votes
      1y

      @Nicholas L. I wish! Wife and 5 kids would not like that! 🙄

      0Reply
  • David M.
    Member since 2022 · 66 posts · 68 votes
    1y

    I like the idea of starting smaller.  That way, you can get a feel for the business with less risk.  See how you do managing 2-4 units first.  Consider the basics of being a landlord; communicating with tenants, managing repairs and maintenance can be challenging for many new investors.  It' not just "buy it and it runs itself".

    I think you'd be completely overwhelmed with 15 units and that big monthly nut to crack.  Run the numbers extensively because my initial  instinct is that the numbers don't work.

    1Reply
  • Peter StewartBusiness Member
    Real Estate Broker · Indianapolis, IN · Member since 2018 · 160 posts · 168 votes
    1y

    I am all for people going big, but if you are brand new to RE investing, I would start with something smaller to get your feet wet. You don't want to make mistakes on a $2.5M property. Make them on a $200k duplex, or something like that.  

    You will need to have a nice pile of cash in reserves for a rainy day. And you'll need at least $500-750k for the downpayment if using traditional commercial financing (20-30% down). However, I think it will be very difficult for you to find a lender willing to work with you given your lack of experience and lower income (relative to purchase price). Also if the gross rents are only $18k per month and the purchase price is $2.5M, I don't think it will cash flow well (if at all). Just doing some quick math - if you finance $2M at a 7% rate, your monthly payment will be over $13k. That is before taxes, insurance, property management, repairs/maintenance, etc. 

    If you get seller financing, most sellers will want some type of downpayment. Even if it's only 10%, that's $250k. 

    If you don't even have that amount, then I think this deal is too big for you to take down on your own. I would either partner with more people (find more experienced people to work with and/or people with $$) or pursue a much smaller deal first (residential MFR, 2-4 units).

    [email protected]317-450-9202Podcast Guest on Show Deal Deep Dive: 2 Real Deals in 2023 That’ll Build Your Retirement Nest Egg
    Peter Stewart Realty4.969 Reviews
    WebsiteView Page
    4Reply
  • Greg Kasmer
    Rental Property Investor · Philadelphia, PA · Member since 2021 · 774 posts · 501 votes
    1y

    Andrew - As others have mentioned this is a big project to start with, but in order to understand if this is a deal that might be a good fit for someone else you'll need to share your pro forma / income statement. As Chris mentioned it appears as though this is about a 5% cap based on what you're indicating above. Given that interest rates are about 6-7% or so someone buying this will be in a "negative leverage" position.... So, in order for this to be enticing their would have to be substantial upside in the NOI. Good Luck!

    0Reply
  • Timothy Hero
    Lender · United States · Member since 2020 · 1k+ posts · 499 votes
    1y

    Newbies dive at these deals from time-to-time. Higher risk due to unit count and higher dollar size, but if you underwriter properly, you can absolutely do it.

    1Reply
  • Pete KrusinskiBusiness Member
    Real Estate Agent · Cleveland · Member since 2024 · 18 posts · 7 votes
    1y

    Hi Andrew,

    Jumping into a 15-unit property as your first deal is bold but doable with some smart planning. With this size of a deal make sure you have a rainy-day fund. I would also recommend looking into different ways to finance the purchase, like seller financing or teaming up with partners. Underwriting is crucial in all deals, but especially as the deal gets bigger. Dig into the numbers to understand all the potential costs and earnings, and factor in things like vacancies and maintenance. I would also connect with investors who own apartment buildings, it's a lot better to learn from someone else's mistakes! 

    I don't have all the specifics, but this deal seems okay. My advice would be to start with something smaller before getting into million-dollar deals. 


    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    1y

    @Andrew K. Your insurance and taxes will likely be much higher than on the pro forma. Tread with caution. I wouldn’t undertake such an expensive purchase as a starting point. There’s too much at stake to lose.

    0Reply
  • Jonathan Chan
    Lender · Clermont, FL · Member since 2020 · 168 posts · 87 votes
    1y
    Quote from @Andrew K.:

    I have been looking and found a nice 15 unit building in a solid neighborhood! Problem is I haven't done any deals yet. Going over how could I get this done? Any ideas?! Net income is around $120kyr. Rents are about $18k monthly. Does this seem doable?


     I wouldn't...multifamily is a team sport.

    0Reply
  • Alex S.
    San Diego, CA · Member since 2024 · 13 posts · 2 votes
    1y

    Double check the inplace numbers you are underwriting with are accurate. Make sure you understand the asset and every single expense line item including maintenance capex. underwrite with FCFF or NOI adjusted for maintenance capex. Id say expenses are more important that rent; expenses you can somewhat control.

    If the thesis on the investment property involves major capex of the int/ext make sure you have someone with GC and project experience on your team. 

    Confirm that the investment thesis is stress tested and put through a scenario analysis. I.e rent growth in a base case, upside, downside; mkt cap rates in base/upside/downside etc. how this affects timeline and stabilized yield. 

    0Reply
  • Mike Rutherford
    Member since 2025 · 39 posts · 15 votes
    1y

    @Andrew K.

    Sounds like you’ve got a solid starting point with those financials. The fact that the P&L includes all expenses and vacancies is great—it gives you a more accurate picture of the deal.

    An assumable loan at 4.1% on $1.5M could be a huge advantage in today’s interest rate environment. Typically, assuming a loan means you’d need to meet the lender’s qualifications and come up with the difference between the loan balance and the purchase price as your down payment (unless the seller is willing to carry a second loan or offer creative financing). Do you know how much equity the seller is looking to cash out?

    As for the 30% down concern, you’re right—most commercial lenders expect 25-30% down, but there are ways to structure the deal:

    • Seller Financing for the Gap – If you can assume the loan, the seller might finance the remaining equity portion as a second mortgage.
    • Investor Partners – If you can structure the deal well, you might bring in a capital partner for equity in exchange for a split of profits.
    • SBA 7(a) Loan (if applicable) – If this deal has a business component (e.g., short-term rentals or onsite management), SBA loans might allow for a lower down payment.
    • Local or Credit Union Lenders – Sometimes, local banks or credit unions are more flexible on down payments if the deal is strong.

    I’ve been involved in multifamily deals and underwriting similar properties, and this one seems promising—especially with the assumable loan at that rate. The key will be figuring out how much cash you actually need to close and whether you can structure it creatively.

    What’s the total purchase price the seller is asking? That’ll help determine the actual gap you’d need to cover.

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free