Is this Multi-Family Brrr analysis sound?

Question

Hello All,

I am new to BP and real estate investing. I love the podcast and was able to get my wife hooked also! We have rehabbed/ flipped both of our personal houses and we are ready to move into houses we will not be living in.

Does this seem like a sound deal?

Purchase 6,000 SF mostly distressed single-family house. Convert into 9 units (township limit) for $665k (purchase price + rehab), Must appraise for $890K to be able to get a loan on the place and for me to pay back my investment. Cashflow after all expenses is $3400 pm.

Is this a feasible deal? I am not familiar enough with how multi-fam units work, but I feel it might be an opportunity I do not want to miss out on either.

Thank you!

Nicholas L. · Answer

@David Lengeman cool, thanks for the update.  Are you working on any other prospects?

David Lengeman · Answer

@Nicholas L. Thanks for taking the time. I am not proceeding with the deal

Nicholas L. · Answer

The risk factors to me were turning a SFH into 9 units; the high purchase price; and your statement that it "Must appraise for $890K to be able to...pay back my investment."

David Lengeman · Answer

@Nicholas L.

Thank you for the response. Are you willing to share what you feel makes this high risk? I just found that the local comps would not support it so I am walking away, however, I am curious to know what you do. Thanks

Nicholas L. · Answer

@David Lengeman this seems like a high risk deal.  How would you finance?