Updated almost 11 years ago on . Most recent reply
Go big or go small-- first investment question.
The more I read and hear about REI, the more excited I get to begin my life as an investor. My husband and I will be buying our first home in June and decided to get a multifamily and owner-occupy with the idea being that the entire place will eventually be rented out to tenants.
After looking at some multi-families though, I happened upon a larger "multifamily" for sale which is actually a complex with 14 one bedroom apartments, one two bedroom apartment and three commercial spaces. It's in our desired area and is for sale for $500,000. I calcualted that our monthly payment would be approximately $4000.
This is the math I did for the unit:
14 One Bedroom Apartments at $700 each (this is being conservative), we will live in the two bedroom, we will rent the three commercial spaces for $800 each (again-- conservative). This would be a total income of $12200 per month. Minus 10% for a property management company leaves us at $10,980. Minus 50% per the 50% rule leaves us at $4880. Minus our $4000/month payment on the property leaves us living "rent free" with an inflow of $880/month. This sounds amazing. Obviously. But I'm wondering if (being so new and all) I'm biting off more than my husband can chew. Thoughs?
Most Popular Reply
This sounds like an excellent deal with me. Considering you gave conservative numbers for gross rent, the property is worth $915k at an 8% cap. You are leaving a lot of room for any "newbie" errors...