10 plus units - What’s your goal?

Question

Hey guys!

What is your goal on cash flow for a multi unit building with 10 plus units? Do you have a specific metric that you are trying to hit in regards to cash flow? I recall hearing Brandon Turner say he looks to hit $100 per door net cash flow. What’s your goal?

Michael Baradell · Answer

@Caleb Heimsoth For this one, I will be at $148/per door as it sits now. I have not walked each unit yet to know exactly what is needed though, but it appears to be in fairly decent shape.

This will be an owner financed deal with 10% down, 5% interest rate and a 5 year balloon.

Current rents are $75 below market rent as is. My goal is to go in and update units to get them up $100, which is current market rent for similar, updated units. Seller is also paying water for tenants, so I will transition that overtime as well.

Caleb Heimsoth · Answer

@Michael Baradell. I’m probably aiming for 150 at a minimum.  I don’t really follow just any one metric. I look at price to rent ratio, appraisal value, area of the property, rent I can get, how much work does it need.  And so on.

Also is this leveraged or non-leveraged? If you buy a property with 25 percent down, I’d aim for 200 dollars a door.  That seems fair to me.  If you’re paying cash it’s probably more.

Dennis M. · Answer

100$ was a fine metric ten years ago but with today’s inflation and prices you really should be hitting 200$ a door . If I had a ten unit and only getting 1000 cashflow  a month that would be a pretty pathetic return in my opinion

Florent Useini · Answer

@Michael Baradell Brandon says $100/unit cash flow is a base hit. $200 or more per unit cash flow is a home run!