First multifamily in Western CT—worth moving forward or better to wait?

Question

My wife and I are looking at our first multifamily investment in Western Connecticut and would appreciate some experienced investors’ opinions.

Here are the numbers:

● Purchase price: $400,000 for three units.

● Layout: Each apartment is a 2-bed, 1-bath with a balcony.

● Projected rent after renovation: $1,900–$2,000 per unit, or $5,700–$6,000/month total.

● Renovation budget: $30,000, including a new roof.

● Financing: Business loan with 20% down ($80,000), 8.625% interest and no prepayment penalty.

● Estimated monthly payment: $3,189, including taxes and insurance.

There’s also an unfinished, street-level basement of approximately 750 square feet zoned for commercial use. We’re treating that as potential future income and aren’t including it in our rental projections.

Some past credit issues have limited our financing options. We’ve spent over two months working through different programs and jumping through hoops to get here.

Would you move forward with these numbers, or walk away and focus on improving credit before buying? What expenses or risks would you look hardest at? We’d appreciate honest feedback before committing.

Drew Sygit · Answer

Definitely chat with @Samuel Eddinger !

Kasing Ng · Answer

Numbers work, but they're tight. After the loan and the stuff PITI doesn't cover (vacancy, repairs, capex reserves, management), you're probably around $800 to $900 a month across all three units. Decent cash flows, just not with much cushion, and at 8.625% one bad turn or a dead furnace can wipe a good chunk of a year.

Two things I'd look hardest at. Pad your reserves beyond the $30k. And the real story here might be that 750 sqft commercial basement you're leaving out. If you can finish and lease it down the road, that's where this deal actually gets interesting.

If the base numbers hold and you've got the reserves, I wouldn't let the credit stuff scare you off a property that pencils. You can refinance a rate but you can't go back and buy it cheaper later (just my opinion, general view, not respective to your specific market and location).

Forrest Greene · Answer

Thank you so much for the insight, I agree

Noah Wright · Answer

Spending two months grinding through programs and leaving the basement out of the numbers is the right instinct for a first deal. On the credit question, waiting only pays if it moves you into a better pricing tier. Most DSCR and business purpose lenders price by score band, so a few months of cleanup can change the rate and down payment if you're close to a break, and changes very little if you're not. The other check is the appraisal. On programs that size off rent, the appraiser usually gives a market rent opinion, and that number, not your projected $1,900, is what any future loan on the property gets sized from. Ask to see it before your contingencies run out. Whether waiting helps depends on how close you are to the next tier, so what's your credit range right now?

Neeraj Diwan · Answer

@Forrest Greene — I’m based in Stamford with J3 Creative Consulting. The projected rents leave $2,511–$2,811/month after your quoted payment, but that still needs to cover vacancy, maintenance, capital reserves, management and any owner-paid utilities.

I’d look hardest at whether the rents are supported by comparable units, whether $30K realistically covers the roof and renovations, and how much cash remains after the $80K down payment, closing costs and rehab. Stress-test a vacant unit, a repair overrun and a delayed lease-up. Keeping the basement income out of your projections is sensible.

I wouldn’t buy solely because financing finally became available, or pass solely because of the rate. The question is whether the property works at today’s terms with adequate reserves, without depending on a future refinance. Feel free to DM me for a free consultation. We can review the numbers and financing structure together.

Erik Estrada · Answer

Is the business loan short term or long term? Are they financing the renovation as well?

Leo Stein · Answer

Forrest, the rate at 8.625 percent is not the part I would walk away on. A rate can be refinanced later if the property is actually worth holding. I would walk away if the three apartments do not work after the real rehab and the operating costs.

Your projected rent of 1,900 to 2,000 per unit looks high for a 2 bed 1 bath in western Connecticut, especially if that is after a 30,000 dollar rehab that also includes the roof. I would want a real rent range from nearby listings, not the top of the market, and a written scope on that 30,000 so I know what is actually included.

Then I would add vacancy, repairs, a capital reserve beyond the rehab budget, management if you are not doing it yourself, and any utilities the owner pays. If the three units still work after that, and you have cash left after closing and the rehab, I would move forward and treat the unfinished basement as upside that is not in the deal. If the deal needs the basement, a future refinance, or full occupancy to pencil, I would slow down.

Credit history is a real constraint, but it is not by itself a reason to pass on a property that works. Not legal advice. Happy to compare notes by message.

Samuel Eddinger · Answer

I don't know of a single part of Connecticut that cash flows at 8.625% interest. I'd be happy to talk to you about some assumptions you might be making in the real estate market. Most 2 bed, 1 bath do not rent for $1900 for one. If they do rent for that high, the property is selling for more like $200k a unit, not $133k. A roof itself could be $30k in this market depending on the size and whether there are hips and valleys.

I flip a lot and own over 20 properties and a property management company. I'd be happy to have a conversation. If interested, DM me.

Mark Updegraff · Answer

@Forrest Greene I wouldn’t let the 8.625% rate make the decision by itself.

I’d underwrite the three residential units as if the commercial space never produces a dollar.

The number I’d pressure-test hardest is actually the $30K rehab, especially if that includes a roof. I’d want a real scope, plus reserves for the things that show up after closing.

Then add the operating expenses that don’t live in the mortgage payment: vacancy, repairs, capital reserves, management, water/sewer or other owner-paid utilities, and any tax or insurance movement.

For a first deal, undercapitalization is usually more dangerous than paying a somewhat ugly interest rate.

If the three units work on their own and you still have healthy reserves after closing and rehab, then the commercial basement is upside. If the deal needs that basement, a future refinance, or perfect occupancy to work, I’d slow down.

First multifamily in Western CT—worth moving forward or better to wait?

First multifamily in Western CT—worth moving forward or better to wait?

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