New to Real Estate · NJ · Member since 2023 · 3 posts · 0 votes
Hello! I am new to the real estate investment game. This is going to be my first property I am purchasing and I am looking to house hack by buying a multi-family with 5% down. With the rates the way they are and in my area multi-family properties are being listed for a high amount like $800k for a duplex, with 2 apartments and 1 bath each. Should I be looking for undervalued properties that cashflow out the gate at a 7% interest rate or should I be looking for one's that cashflow at a 5% interest rate and then wait for the rates to drop? If so how much should it cashflow at 5%? Should I be looking elsewhere if nothing on the market in my area cashflows at 7%?
I know that most people say it's dependent upon your area and what you are comfortable but I am just looking for any guidance. It is greatly appreciated!! Thanks!
Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
2y
Congratulations first on getting into the mindset of a real estate investor. House hacking a 4 plex is what I often recommend to people getting started. Everything is overvalued right now though the market is softening. You need to consider how long you will be keeping this property. If you don't have a lot of cash, then you will be looking for cash flow, period. When comparing properties, it doesn't really matter what the interest rate is as long as the cash flow is the same. If the deal works, then now is the best time to buy.
Make your offers based on the cash flow that you need. A lot of them will get rejected and that's fine. Don't let that make you change your criteria. Stay local. Eventually, you'll get a hit.
To your question in the post's title: It's got to beat low risk investing, such as treasury bills. There is higher risk here, so it's based on what your risk tolerance is. Right now, 7% cash on cash would be what I'd shoot for. This number is very investor-specific though.