First multifamily deal

6 Replies

Hi Guys,

My little introduction I am investing in real estate from last 5 years started with rentals. as of now hold 15 rentals units (all 1-4) here in California and Ohio. this is the first time I am trying to invest in a small apartment complex. trying to do for a long time but never seen an opportunity where numbers make sense. but this one seems to be decent cash flow. and also there is some value-add.

 I need some expert opinion who can let me know what is going on.

Location -- It is in SF bay area City called Richmond.

Price 1.25 MM Asking (we are under contract around the same price )

Unit mix we have 5 2-1 and 3 3-1

Current rent I $1400 and 1600 for 2 bd and 3 3bd around 12260 gross. all tenants are on a month to month lease. 

CAP rate on the property is around 7%

Expenses according to owner current expense look like around 5000 including 5% vacancy 5% repair   7% property management etc

My approach - just acquired a property and try to raise rents over the course of a year.

My due diligence 

1. I have done research on Rentometer and craiglist and called couple of people to know the rents can be raised 

2. the current owner bought this property for 630K in 2013 for 9% cap (I know it is  not relevant )

3. According to other people expenses on the water seems to be low. I am going to ask for all the actuals

4. we are going to do the inspection. 

5. Insurance I am going to ask my agent to prepare a quote

6. Hot water heater is common (3 of them)  might need to see exact age and try to find out if I can convert them

Here are details on my analysis

I need advise especially with multifamily investors in bay area 

1. Richmond as location (I live in Fremont)

2. I got some suggestion from experts and mentors about water being a bit low. I am going to verify it from actual bill. 

 Please let me know if I am missing something here. The first commercial can be really overwhelming :)

Also if you are in the bay area and would like to learn more about this deal please let me know,

Thanks for your help

Hi Rahul,

I own some mulitfamily properties in Richmond and I'm very familiar with the area.  Happy to have a conversation with you and be a sounding board on some of the things you should do for your due diligence.   Feel free to PM me. 

Originally posted by @Rahul Bhatt :

Hi Guys,

My little introduction I am investing in real estate from last 5 years started with rentals. as of now hold 15 rentals units (all 1-4) here in California and Ohio. this is the first time I am trying to invest in a small apartment complex. trying to do for a long time but never seen an opportunity where numbers make sense. but this one seems to be decent cash flow. and also there is some value-add.

 I need some expert opinion who can let me know what is going on.

Location -- It is in SF bay area City called Richmond.

Price 1.25 MM Asking (we are under contract around the same price )

Unit mix we have 5 2-1 and 3 3-1

Current rent I $1400 and 1600 for 2 bd and 3 3bd around 12260 gross. all tenants are on a month to month lease. 

CAP rate on the property is around 7%

Expenses according to owner current expense look like around 5000 including 5% vacancy 5% repair   7% property management etc

My approach - just acquired a property and try to raise rents over the course of a year.

My due diligence 

1. I have done research on Rentometer and craiglist and called couple of people to know the rents can be raised 

2. the current owner bought this property for 630K in 2013 for 9% cap (I know it is  not relevant )

3. According to other people expenses on the water seems to be low. I am going to ask for all the actuals

4. we are going to do the inspection. 

5. Insurance I am going to ask my agent to prepare a quote

6. Hot water heater is common (3 of them)  might need to see exact age and try to find out if I can convert them

Here are details on my analysis

I need advise especially with multifamily investors in bay area 

1. Richmond as location (I live in Fremont)

2. I got some suggestion from experts and mentors about water being a bit low. I am going to verify it from actual bill. 

 Please let me know if I am missing something here. The first commercial can be really overwhelming :)

Also if you are in the bay area and would like to learn more about this deal please let me know,

Thanks for your help

You have lot more properties than I do, and probably more experience as well. But that being said, have you given any thought to what you are going to do with the current M2M leases.  Do you prefer M2M or you are going to convert them to Yearly leases? Or are you going to let some of the tenants go. Do you have any verifiable information/intel on how good the tenants are, and if they pay on time ?

As I am learning from first hand experience never to accept a SFH or a small Multi Family with current tenants, but yours is a case of a bigger complex, so I am sure you don't want to lose all the income, by putting in that condition.

Thats a great question As per my understanding real estate is so big there are so many information to learn from no one knows even 5% of it :) 

to answer your question. I personally dont like M2M lease. but in this case I love it because

1. I dont like inherited tennat a lot never had good experience with them. so when I buying new building I would like it to be month to month so if tennat are not good (very common in C area) I can tell them to move out. 

2. in this property whole upside is with rents so I dont have to wait for 6-7 months to do that.

Hope it make sense Please send me PM if you have more question 



Originally posted by @Chinmay J. :
Originally posted by @Rahul Bhatt:

Hi Guys,

My little introduction I am investing in real estate from last 5 years started with rentals. as of now hold 15 rentals units (all 1-4) here in California and Ohio. this is the first time I am trying to invest in a small apartment complex. trying to do for a long time but never seen an opportunity where numbers make sense. but this one seems to be decent cash flow. and also there is some value-add.

 I need some expert opinion who can let me know what is going on.

Location -- It is in SF bay area City called Richmond.

Price 1.25 MM Asking (we are under contract around the same price )

Unit mix we have 5 2-1 and 3 3-1

Current rent I $1400 and 1600 for 2 bd and 3 3bd around 12260 gross. all tenants are on a month to month lease. 

CAP rate on the property is around 7%

Expenses according to owner current expense look like around 5000 including 5% vacancy 5% repair   7% property management etc

My approach - just acquired a property and try to raise rents over the course of a year.

My due diligence 

1. I have done research on Rentometer and craiglist and called couple of people to know the rents can be raised 

2. the current owner bought this property for 630K in 2013 for 9% cap (I know it is  not relevant )

3. According to other people expenses on the water seems to be low. I am going to ask for all the actuals

4. we are going to do the inspection. 

5. Insurance I am going to ask my agent to prepare a quote

6. Hot water heater is common (3 of them)  might need to see exact age and try to find out if I can convert them

Here are details on my analysis

I need advise especially with multifamily investors in bay area 

1. Richmond as location (I live in Fremont)

2. I got some suggestion from experts and mentors about water being a bit low. I am going to verify it from actual bill. 

 Please let me know if I am missing something here. The first commercial can be really overwhelming :)

Also if you are in the bay area and would like to learn more about this deal please let me know,

Thanks for your help

You have lot more properties than I do, and probably more experience as well. But that being said, have you given any thought to what you are going to do with the current M2M leases.  Do you prefer M2M or you are going to convert them to Yearly leases? Or are you going to let some of the tenants go. Do you have any verifiable information/intel on how good the tenants are, and if they pay on time ?

As I am learning from first hand experience never to accept a SFH or a small Multi Family with current tenants, but yours is a case of a bigger complex, so I am sure you don't want to lose all the income, by putting in that condition.

According to my reaseach rents are low. and currently it is upcoming area. this property is around a lot of SFH and it is not proeprly maintained. so as of now rents are very comparable to san pablo area. so i want to cleanup things and wrong tennats. make it nice curb appeal.  If I get it done I am working on quartly plan how I want to get there.


Originally posted by @Andrew Babcock :
Curious what your value add plans are??

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