How Much Per Month On One Million?

Question

In the market for a small apartment building.

One million purchase price.

Let’s say hypothetically 15 units.

What does each unit need to rent for to make it a good deal?

Your thoughts?

Will Fraser · Answer

Hey @Luke Carl!  I'm betting your simply looking for thoughts here and not guidance (you rockstar you!) so I'll think through that lens:

If I was deploying $1MM on a small apartment building I would want either

• $10k per month in cashflow IF I had access to long-term, fixed-rate, cheap debt on it (hard at this price-point)
• $100 per unit, s $1,500 per month of true cashflow.

Realistically I'd shoot for the upper number here and would expect the units to need to be rented somewhere around $1,100 per unit per month to hit those numbers (with a LOT of assumptions being made to get there, ha)

Todd Dexheimer · Answer

Depends on your hold period- are you holding it 1 year, 5 years, 10 year, forever.

Depends on the area - A, B, C, D class

Depends on the building type - A, B, C, D class

Depends on the strategy - Core, core plus, value add, redevelopment

Depends on the financing and the down payment money

Depends on experience of you and your team

Depends on so much more to determine what a good deal is

I myself look for deals that are value add or redevelopment opportunities, where we can adjust the NOI/cash flow enough to average our investors 8%+ annualized cash flow with a 15%+ IRR over a 5 year hold. Typically we are in the $100+/unit range on a 100+ unit asset.

Brian Garrett · Answer

I'm in the market for the same but unfortunately here in my area $1MM is more like 5-8 units.

Obviously the location and asset class plays a major role here but I'd want at least $10k/month gross rents.

I'd also be looking for value-add so I can create additional equity to tap into rather than leaving my capital parked.

Eric Bilderback · Answer

I think I own that place!  1 million or so 15 units I wish I had it debt free though.  I think I would have it under contract in a day.  Market rents are about 725.  The places are currently averaging around 650.  Oh I would say you would get 5500-6k a month.

Mike Dymski · Answer

$1,000/mth.  Still won't cash flow like your STRs.

Separately, many investors in this space require the ability to add value to consider it a good deal.

David Smith · Answer

Stock market will return better.

How Much Per Month On One Million?

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