Multi family res. investments

[Sara Als.]

Hi everyone, I am new to this site but not to totally new to real estate. 

I wanted your expert opinions on multi family residential investments. In today's market, most of the multi family listings in my market of Atlanta are listed at the higher end of the price range and sometimes overpriced, obviously it's a hot RE market. I would like to purchase one of these but what I am seeing is that I would be paying a premium (unless I buy a property that needs a rehab, a foreclosure, etc.). 

Does it make sense to purchase when the property history shows it was purchased 2-4 years ago at 50% cheaper than the current listing price? I find many properties with NOI that I like but knowing that the initial cost is really high and that I would be purchasing at what looks like the peak is pushing me back.

What are your thoughts? 

Sara 

[Paul Smythe]

@Sara Als.

I wouldn't really worry too much about what the price was a few years ago. That's useful information that you should ask for, but it shouldn't make or break the deal for you. Maybe they rehabbed it and it's in really good shape now. Maybe the area is on the rise and rental rates are shooting up. Who knows?

What really matters is whether the property in its current state is worth the current price. Things change. Plenty of areas in Atlanta have seen significant growth over the last few years (residential and multifamily). It's not unrealistic to see property values increasing significantly in a new, hot area.

If the cap rate (net income divided by purchase price) meets your target, then it's worth looking into. If it doesn't, probably not.