New Orleans, LA · Member since 2017 · 1 post · 0 votes
Hi everyone!
My husband and I have been landlords in other cities, but want to invest in NOLA since we live here now. What would you say is the average ROI for a multifamily rental here?
Do you usually find your properties on MLS? If not, where are you finding them? We are looking for a multifamily rental property and are concentrating our search in Uptown, Midcity, or Marigny, but aren't finding much in our price range. Good luck, right?! Any other neighborhoods we should be considering?
Investor · New Orleans, LA · Member since 2012 · 968 posts · 747 votes
9y
Hi @Marcea Schwilke. I am a local investor and realtor here in the New Orleans area. As you may have noticed we have a rather unique real estate market here. Most other major metro areas have clearly defined lines between good and bad areas, where here things can change drastically from one block to the next. This makes our market much more of a challenge than most, as you really have to know where the lines are. Property values can be quite different from one block to the next. This just takes time to learn.
As far as an average ROI for multifamily... that would be hard to say. I look at cash flow rather than a percent ROI.
Our market is completely saturated with real estate investors, so finding good deals has become quite difficult. You won't find them on the MLS that's for sure. Check out or local REIA which is NOREIA and connect with some of the local wholesalers. But the best way to find good deals in our area is direct to seller through whatever means you choose, wether it be cold calling, direct mail, internet, etc.
I'm not sure what price you are looking for, but prices in Orleans parish are at a premium, even for average condition properties. In our area we only have so much land to go around as we are surrounded by water with the lake to the north and the river to the south, and this drives prices up. The demand is high and the supply is low. The areas you will find lower prices are in not so good neighborhoods. You may be able to find some things in a decent price range in neighborhoods that are in transition, but that all depends on what you feel comfortable with.
If there are any questions I can answer for you, fell free to reach out.
Investor · New Orleans, LA · Member since 2012 · 968 posts · 747 votes
9y
Hi @Marcea Schwilke. I am a local investor and realtor here in the New Orleans area. As you may have noticed we have a rather unique real estate market here. Most other major metro areas have clearly defined lines between good and bad areas, where here things can change drastically from one block to the next. This makes our market much more of a challenge than most, as you really have to know where the lines are. Property values can be quite different from one block to the next. This just takes time to learn.
As far as an average ROI for multifamily... that would be hard to say. I look at cash flow rather than a percent ROI.
Our market is completely saturated with real estate investors, so finding good deals has become quite difficult. You won't find them on the MLS that's for sure. Check out or local REIA which is NOREIA and connect with some of the local wholesalers. But the best way to find good deals in our area is direct to seller through whatever means you choose, wether it be cold calling, direct mail, internet, etc.
I'm not sure what price you are looking for, but prices in Orleans parish are at a premium, even for average condition properties. In our area we only have so much land to go around as we are surrounded by water with the lake to the north and the river to the south, and this drives prices up. The demand is high and the supply is low. The areas you will find lower prices are in not so good neighborhoods. You may be able to find some things in a decent price range in neighborhoods that are in transition, but that all depends on what you feel comfortable with.
If there are any questions I can answer for you, fell free to reach out.
Just wanted to add that the question about ROI is a bit vague. It depends on what you're looking for. Are you looking to bank on appreciation with A/B properties that don't cash flow well, or C/D properties that cash flow better but won't appreciate much, if at all.
In a competitive market like NOLA, MLS and loopnet are hail marys. You need to find off-market deals through direct mail, door-knocking, social media marketing, or other means. The low hanging fruit is saturated though, so you may need to do a bit more like making friends with the mailmen in the neighborhoods (updtown, midcity, marigny) that you want and giving them a commission for any properties they find you that you buy. Or making friends with some lawyers that dispose of properties for trusts, etc.
Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
9y
@Marcea Schwilke I also agree with what @Braden Smith stays. Given your thinking about buy and hold, I am also not sure that I would look at ROI as my benchmark. Cash flow or CAP rate would be a better metric.
As you have found, your desired areas are super hot right now, and I don't imagine that you are finding much on the market that meets any decent metrics from an investment standpoint. Even the wholesale properties that are being pitched are super expensive and only make sense for flips, not buy and hold rentals. This assumes that we are talking about 2-4 units properties, as I dont have any experience with 5+ commercial properties.
Investor · Jacksonville, FL · Member since 2017 · 55 posts · 20 votes
9y
Very interesting thread here - appreciate everyone's input! I'm new to the NOLA area (in the Navy and now stationed here) and agree finding the right valuations in this market is tough confirming it's a little saturated. I would be interested in some 5+ properties in the surrounding area, @Mike Wood. Maybe better valuations there? You guys like Baton Rouge?
Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
9y
@Jeff Foulds I am not up on commercial multifamily, but understand that the typical CAP rates are in the 8% range. My current focus is currently in 2-4 unit buildings.
Investor · Jacksonville, FL · Member since 2017 · 55 posts · 20 votes
9y
I gotcha @Mike Wood. Thanks for the cap rate assessment. Yeah I'd prefer the 2-4 unit too but open to larger if I can support with the capital I can get my hands around
Investor · Baton Rouge, LA · Member since 2014 · 128 posts · 138 votes
8y
@Jeff Foulds I love Baton Rouge for small multi-family. I have 2 duplexes myself. My dad was born & raised in N.O. and still lives there, but all (50+ units) of his rentals are here in BR. He likes the small MF (2-4 units) and BR just has a better market for that (in his experience). I'm pretty new to the game, but have had the same experience. It's still competitive, but it's been relatively easy to find good deals on small MF in good areas here in BR. Might be something to look into!
Investor · Jacksonville, FL · Member since 2017 · 55 posts · 20 votes
8y
@Amy Verges, thanks for the info! Yeah, I'll continue to look in BR for sure then. Saw what could be a potential in the Gradere area but passed on it. A word-of-mouth suggestion. The lists haven't produced any leads that seemed too fruitful that I've found so far. I'm thinking of including BR in a direct mailing campaign looking for SFR & MF. How have you been looking for leads?
Investor · Baton Rouge, LA · Member since 2014 · 128 posts · 138 votes
8y
@Jeff Foulds I'm not a fan of the Gardere area. Too many crime issues considering I am managing my own properties. But if that doesn't bother you, you can get great returns there. I've done some direct mailing, but I actually found my last one on the MLS. Although anything good on there is gone in a day, so you have to be quick to take advantage. I haven't closed on any deals from direct mailing yet, but I've gotten really good responses from the little bit I've done here. Hope that helps!
Investor · Jacksonville, FL · Member since 2017 · 55 posts · 20 votes
8y
Yes, concur on Gardere. That's good to hear on the DM! Care to share your response rate for how many sent? Did you use Listsource or someone else to target them? Thank you!
Investor · Baton Rouge, LA · Member since 2014 · 128 posts · 138 votes
8y
@Jeff Foulds Sorry about the delay--for some reason I didn't see the alert for your response and just happened to come across it today. Yes, I used Listsource and narrowed it down to exactly what I was looking for. Admittedly, I did a terrible job tracking, so I'm not exactly sure of my response rate. With the last mail out that I did, I only sent around 150 letters (I'm very picky) and got about 25-30 calls with 4 or 5 that I actually made an offer on. Those are total estimates, but hopefully that helps. Good luck with everything!