New, young investor looking for guidance.

[Coy Messer]

Hi everyone,

My name is Coy Messer. I’m turning 20 next month and I’m from a small town in Iowa. I started my own business (in a different industry) about 5 years ago, and it has grown to the point where I’ve built up a decent amount of capital that currently isn’t being invested as efficiently as it could be.

That’s what’s pushing me toward real estate. I want to take advantage of my age and long time horizon to start building something meaningful early. I’ve had a lot of people tell me to “get into real estate,” but I haven’t gotten much actual guidance. So I’m trying to learn as much as I can and make a smart first move.

The Deal I’m Looking At:

I’ve been analyzing what would potentially be my first property, and I’d really appreciate feedback from people with more experience.

• Property Type: Multifamily - 7 units
• Location: Cedar Falls, Iowa (near a college campus)
• Tenant Base: Primarily student/college-area renters
• Asking Price: $769,000 range
• My Target Offer: Around $600,000

Financials (Based on Current Info from Realtor)

• Current NOI: $64,000
• Cap Rate at $600K: ~10.6%
• Financing Assumption: 25% down, ~7% interest, 20-year amortization

From my projections, the deal cash flows, but not at a massive level after debt service (or is this a nice cash flow given the property). However, I see upside in improving operations.

Value-Add Opportunities

• RUBS:
  Currently, utilities are not fully passed through to tenants. My understanding is I could implement RUBS over time as leases renew and recover a portion of those expenses.
• Operational Improvements:
  Some units have been updated, but not all. There may be room to gradually improve rents.
• Location Advantage:
  Being near a college, demand seems relatively stable, but I also want to make sure I’m not underestimating turnover risk.

My Main Questions / Concerns

• Does this seem like a solid first deal, or am I forcing it just to get started?
• Am I analyzing this correctly from a risk standpoint?
• How much weight should I put on future upside (like RUBS), vs. buying strictly on current numbers?
• Is this level of cash flow reasonable for a first deal, or should I hold out for something stronger?
• Anything I might be overlooking entirely?

Where I’m At

To be completely honest, I think the biggest thing I’m struggling with is confidence. Being young and making a decision at this level, I just want to make sure I’m doing this the right way, smart, safe, and not rushing into something just because I want to get started.

I’d really appreciate any feedback, advice, or even criticism from those with experience in the industry.

Thanks in advance.