Cash flow on Massachusetts Multifamilies

8 Replies

For you other Massachusetts multifamily investors, how much cash flow are you looking for per unit in the current market? It seems as though $100 per unit after mortgage and expenses is a good deal in the current market, but I've heard of folks looking for $200 or more per unit in Mass. 

How much cash flow per unit would you consider to be a good deal?

$100 would be the minimum I would expect but I aim for $200-$400.

Depends on your area!

@Joe Rinella Your cashflow depends on where you are financially e.g. 15 vs 30 loans, %down, ability to increase rents with improvements...

For a long time I had slight negatives because I had a high salary.

What are you looking for?

Thanks @Dante Pirouz that's good to know.

@Mike Hurney  I've been looking for deals with $100 cash flow per unit in Central MA, with a 20% down payment. I want to make sure I'm not aiming too low though, so I'm curious what other local investor's expectations are for multifamily deals right now. 

Thanks @Joe Rinella , I have the same question!

I haven't started purchasing multi families yet but am interested in the south shore and are looking to find where my math is going wrong. It seems that the cash flow could be much higher in MA. Looking at loopnet.com many multi families on the south shore are advertising their cap rates ~8%. So a 4 unit $400k apartment with 8% cap rate, wouldn't that be $32000 per year of net operating income? which would be $666 per unit after mortgage and expenses. Assuming a 20% downpayment would also mean a 40% cash on cash return which sounds absurd considering the BP podcasts talk about a 12% cash on cash return goal.  

Is it the fact that the cap rate advertised is over inflated and actual cap rates are closer to 4% or less? Or have I made a fatal error somewhere?

edit: I found the problem, my apologies, I was assuming NOI included mortgage payments which it does not. Rerunning the above with the advertised cap rate nets you just under $200 per unit per month for a 4 Plex.

Therefore back to the original post, check out loopnet.com and you might find that $200 per unit per month in MA is doable after all. 

For me I want $500, but I will put 30% to 40% down typically.

12% might be the goal but in Worcester and southern nh you can easily find 25% and I target 35% or greater, I'm only look at 6 units and up for that reason.  Quantities of units below that and the numbers get squeezed very very fast.  Just keep your eye out.  It is a little easier to get those numbers the higher in units you go considering economies of scale etc.

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