Rental Property Investor · PA/NJ/NY/DE · Member since 2019 · 9 posts · 2 votes
What are typical minimum monthly cash flow & cash on cash return you target for single family & multi family homes? I am looking for locations & markets that can yield that formula.
I have heard single family minimums are normally $200+ monthly cash flow & 12% Cash on Cash return. Any help is greatly appreciated.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Cashflow per door doesn't mean much to me on large Multifamily, as you have different unit sizes and pricing. Cash on Cash numbers for me be 8%+ on a stable asset with now more than 75% leverage.
Rental Property Investor · Fayetteville, NC · Member since 2018 · 65 posts · 43 votes
7y
Hi Andrew,
I’m currently striving for cash flow of $100/door and a cash-on-cash if about 9%. I obviously want to maximize that, but I look at the equity I can build through forced appreciation as well. For instance, raising rents and cutting expenses may increase the value of the property $XX,000. I’m not a home run hitter when it comes to those numbers, but simply just try to hit a single.
Rental Property Investor · Johnson City TN · Member since 2016 · 386 posts · 271 votes
7y
@Andrew B Degnan - If you're talking about stabilized/turnkey investments, then $200-300 and 10-12+% is typical for SFR. Multifamily might be $100/door and 8-10%.
Keep in mind that anything that is a value add property will have variable cash flow over the hold and your average cash on cash return may be spiked by the exit.
Rental Property Investor · Fayetteville, NC · Member since 2018 · 65 posts · 43 votes
7y
@Andrew B Degnan, this is just a snippet, but on SFRs, as the BP bubbas mention often, turning a 2br into a 3br is a great way to add-value and command higher rents. Cosmetic rehabs such as new paint, flooring, etc go a long way. I put in new vinyl flooring, a new bathroom vanity, cleaned like crazy, and put in some cheap backsplash in the kitchen. That property sits at an 8-cap right now so spending just under $5K/unit has increased the value of the property $10K/unit because now I can charge higher rents, which increases NOI. So to answer your question, increasing the NOI of the property will increase the value of your multi-family.
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
Cashflow per door doesn't mean much to me on large Multifamily, as you have different unit sizes and pricing. Cash on Cash numbers for me be 8%+ on a stable asset with now more than 75% leverage.
If you want to forcefully appreciate the value of a property, you should either increase the income of the property, decrease expenses, or both as mentioned by @Brian Metz. When increasing the income, you can raise the monthly rent and minimize vacancy as much as possible. While those are definitely the most basic methods, I would also look into the possibility of expanding more living space for a reasonable amount of money by turning an attic (basement is another option) into a bedroom. Especially for MFHs, adding extras such as a laundry unit can produce higher rental income for a single expense. Renovating the exterior by putting on newer paint also comes in handy since first impressions are very important.
I would also manage energy usage by replacing incandescent bulbs with LED lights and perhaps looking into your cooling/heating expenses; it can add up and significantly reduce costs. You could also installed tampers in the shower and added toilet flow calibrations to reduce unnecessary water flow.