Stockton, CA · Member since 2014 · 93 posts · 13 votes
I'm fairly new to RE investing. Have been looking for MF properties for almost a year now. There just doesn't seem to be any within 200-300 miles which would seem like good investments. I've tried the 50% or 2% rule and there's really nothing around. Here is a scenario, let me know if it makes sense? I'm in Northern California.
Sales price = $600k for 12 units. Would put 30% down.
Monthly total rent = $8160
The seller has low expenses and I've seen the actual number, but doesn't mean future expenses will be the same.
Residential Real Estate Broker · Palo Alto, CA · Member since 2011 · 49 posts · 21 votes
12y
The seller's expenses won't be your expenses in the long run, so I recommend throwing them out and coming up with a new set of numbers based upon how you would operate the asset. Maybe you can get them lower, but you may also find that what you're seeing is artificially low for any number of reasons.
Investor · Clovis, CA · Member since 2012 · 44 posts · 11 votes
12y
Tou,
I think you've got a decent deal granted no significant further work is required of the property. In general, the 50% & 2% rule in California will be hard to come by at the present time and if someone did find one, it was likely not found online but through relationships, some sort of pocket listing, or seller motivation. By the way, what is the seller's motivation, if any, for selling? Sometimes this may help you get better terms. Any reason for 30% down in particular?
Generally, we have to adjust our expectations to the market or housing cycle we are in. Prices are different in every market & at different times.
The question is what returns are you willing to accept based on where you choose to invest.
Rental Property Investor · Oakland, CA · Member since 2011 · 3k+ posts · 2k+ votes
12y
@Aaron Montague , very strong buyers w/ solid multifamily in good markets (at least Bay Area) can get a 5/1 ARM around 3.0% with a good downpayment, so there's even more "gravy" in there than those numbers, which is part of why MF is so hot right now... it's amazing!
@Account Closed , do you know @Joey Budka , @Account Closed , or any of the other BP folks down in the South Bay? We have pretty frequent meetups, but haven't seen you a lot on the forums..
You should come out to the Massive RE Investor's Summit I'm organizing in the Bay Area around October of this year! Please post on the link below if you're interested!