I want to make this my first Multi-Family deal. Thoughts?

1 Reply

I invest in the Cincinnati area so I am not that familiar with the area.

But just doing a little bit of research (a few seconds using Google), it sounds like that area is a "C" area or even a "D" area. 

Your numbers (expenses) are too optimistic - i.e., they are TOO LOW.

Generally, in C and D areas you get a lot more turnover. So make your vacancy 10%. Also, there are more repairs so make your repairs 15% not 8%. Lastly, given the property is old (built in 1916 and FRAME not brick), I would allocate 15% for capex.

Lastly, you are not factoring in management - that's another 10%. Believe me - you will want to outsource the property management of properties in bad areas. The headaches are not worth it. Otherwise, your time will just go to this one deal and you won't be able to buy any other property. I have property managers with all of my rentals. Doing so allowed me to buy hundreds of units since 2006. Learn from my post  - How I made Over $1Million on One Deal

Run your numbers again and don't fall in love with any property. Be realistic with your numbers. NO DEAL is better than getting a bad one.

I will NOT do this deal unless your cap rate is at least 12% with the revised numbers.