What is the cash per door or cash per unit that you get

Question

Hi there - still looking to close on my first multi family rental property. I have been focusing on 2,3,4 units places in the Hudson Valley area of NY state. The question i have is what the cashflow per unit you are getting on your investments?
For the places i have been considering, after expenses and mortgage payments, i am looking at around $150 - $190 per unit per month. Curious as to what other investors are seeing?
Also - i listened to a recent podcast on BP with Brie Schmidt and i was blown away that she is getting $400 to $500 per unit on all of her units! It made me think did i misunderstand that quote in the podcast; or are my deals just nowhere near as good as what others are seeing.

Brie Schmidt · Answer

@Nathan J. - Cash flow per door is just one piece of the puzzle. Yes, my cash flow is about $450 per door - but I also paid $100k + per unit. I also bought my units fully rehabbed and condo quality so my maintenance and repair costs are super low. And I can rent out the unis for above market rents.

My $25k per unit properties bring in about $100 per door which I am very happy with

My $25k per unit properties bring in about $100 per door which I am very happy with

Anthony Gayden · Answer

I am trying to do the math to figure out how I could make $400 per unit a month. So for a 4 plex, I would need to make $1600 after all expenses, and after the mortgage is paid every month.

Let's assume the building had $5000 a month in income (rent is $1250/month per unit). Using the 50% ruled, $2500 would be the monthly expenses, meaning that the mortgage could not be any higher than $900. A purchase price of $220,000 with a 25% down payment of $55,000, 5% interest and 30 year amortization would mean a monthly payment at about $885.

So all I would need to do to get that income claim is find a $220,000 building that get's $60,000 in gross income a year. I don't know about you guys, but I am not seeing deals like that anywhere.

Chris Vacek · Answer

@Nathan J.

Trying to make a decision based on cash flow per door is too broad in my opinion.  It just doesn't take enough into account to be an accurate way to compare properties.  Irr is in my opinion the best method of evaluating these properties.  Next would be cash on cash.

For our investments in the hudson valley we do have properties that are pulling in 400-500 per door.  We also have properties pulling in as much as 700 per door but these are both value add properties that have been stabilized for a while.

Can you find properties in the hudson valley that meet the criteria above?  Absolutely.  But as @Nick G. mentioned that's not really a great return considering a 25% DP.

My family has been living and investing in the HV area for generations.  If you would like to have a quick chat about your investment goals and where in the HV is the best place to meet those goals PM me your phone number and I would be happy to lend some of our experience.

Account Closed · Answer

It will differ. If I remember correctly, Brie was working with higher-end units? It will depend on how much cash you're putting in as a downpayment and what your mortgage repayments are. The best comparison will be to run the numbers on other similar homes in your area to see whether these numbers are high or low based on property prices, rental, costs in your area and your financial scenario.

Darron Stewart · Answer

@Carole G. @Nathan J. The deals are out there, 61k for Carole - great going, I am averaging slightly over 62k but could make $40-60k if flipped and if I was 100% financed would net about $500 per door.  It is really all about the negotiating and patience, if the numbers are not there, let it go, may see it again and they will eventually come down!!!  Negotiated for 9 months on one, just waited 4 1/2 months to clean up estate title and today put in another bid on sfh that has been on and off market for 4 years - sale, short-sale, now foreclosure...

Carole G. · Answer

I get about $250/door and I paid about $61k per unit, so about the same ratio.

Nathan J. · Answer

Thanks brie. That's very helpful (and inspiring)

Nathan J. · Answer

Great point Anthony. That's what led me to ask about Brie's podcast. I have not found anywhere near those numbers. I have only been looking for about 2 months, and in the hudson valley area, but still those numbers ($400 per door) seem too good to be true!

Nathan J. · Answer

You're right on that. Though when i do my calcs i usually factor in 9% of annual income for repairs, and about 6% for vacancy. I may move that repair assumption down to 6% if the property is in excellent condition. After that i am at about $150 to $200 per door and about 11-14% in yield. I haven't actually pulled the trigger anywhere though i have a few offers in play. So at the moment this is all theory...

Nick G. · Answer

@Chris Vacek I agree, cash flow per door is just 1 piece of this.

I have seen numerous multi's in Poughkeepsie that will cash flow on paper, but you know that deferred maintenance is there and the with some older units that could crush a new investors reserves.

What is the cash per door or cash per unit that you get

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