Hey guys! I'm new to analyzing deals. I found a 4 plex multifamily in St. Pete beach in the same zip code I live in. It's selling for $675k. I wouldn't have all the cash, but running numbers it seems like it would be a good investment. How would you go about finding money to get for the down payment? Does anyone look at this and see something different than I do? There is a huge upside for Airbnb's here. I would be fine managing it since it's down the street. Rehab and make it nicer....I have a good chunk of cash but not enough to go at it alone.
I would love to meet someone who is willing to take a chance on a gal and her dream of investing in multifamily.
@Andrea D. are you planning to live in it? if not, your best bet is to treat it like a BRRR. Find short term debt, either private or hard money to buy it and rehab it, increase the value and refinance out. This will limit your down payment.
The other option is to live in one unit for a year. this opens you to FHA loans, VA loans (if eligible), or 203K loans which combines a rehab on an FHA loan.
if the numbers make sense for either of these strategies, this is a great way to get started.
First off, excellent choice with St. Pete Beach! I am about 1 mile from this 4plex as I type this lol, I know the property you are discussing. Cannot beat the location and St. Pete Beach is as hot as ever, and only improving with the removal of the development moratorium. Think you have a winner here!
On the funds to acquire... One obvious answer is to house hack if that's an option for you. Alternatively, if you have significant equity in other properties, you could borrow against the equity in those (cross-collateralize) and show funds down for the 4plex. This is not always easy, but one of the few options I believe lenders will allow for borrowed funds to be used as investment down payment. They'll want significant reserves on top of this as well, likely 6-12 months of PITI.
Hope this helps.
@Alex J. McGathey - Thank you for your answer! I am wondering if it would be insurable...it's currently self insured by the owner, and I had my realtor pull the seller disclosure. It shows it has polybutylene pipes. In your opinion, would this be too big of a job to take on? I can't tell if it would be asking for a money pit.
I would be wanting to house hack and put as little down as possible. I am currently selling my condo in Ybor - it closes this week and I am in a rental on treasure island month to month to allow flexibility. Therefore, I won't have anything to borrow against, but I am grossing $82k in the sale. Likely $65k net. I am wondering if I should keep searching for something more "cosmetic" since it's my first time trying to take on a project like this. Also, I wonder if it's self-insured since it's also in a flood zone...
Any recommendations on what you would do? There are some cute ones out by old NE I am going to try to take a look at, but I was thinking I could buy with 5% down since I will owner occupy it. My broker emailed saying he thinks I need 25% down. Did something with multifamily lending change?
@Zach Westerfield thanks for your input. I originally thought BRRRR but am thinking I want to stash cash and try to do that with a smaller house once I will need to put 20% or more down. Ideally I'd like to own it outright, but that isn't realistic. I know I just have to start somewhere to get my foot in the door. I haven't looked into 203k loans though. I will ask about that and research to see.
I'm on the same boat as you @Andrea D. I'm looking for a multi unit to house hack in that market. You can do a 5% down if it's 4units or less and you plan on making a unit your primary, depends on what banks you go through. My lender did tell that fannie mae freddie mac aren't lending too much on the investment side at the moment, so that might skew things up. Also be aware that a lot of investment properties are getting eaten up by cash offers and sellers might not be too keen with conventional financing at the moment, since they have that option. Another thing to take note of are the areas around St Pete. Some require a 30 day min stay and might affect your short term rental ideas.
@Andrea D. I love St. Pete Beach and the long term potential for both appreciation and cashflow. One thing to keep in mind though, St. Pete Beach municipality has been cracking down on STR. Currently they only allow a minimum stay of 30 days. There is a bill currently being discussed by the senate on how to proceed with STR moving forward. Check out
(SB 522) for more information and where it currently stands.
Love the initiative. Keep rocking.
I looked at your analysis and if you are looking at it as a STR I think those assumptions are way off. But the final result still looks promising. As an STR your vacancy rate in SPB will be about 36%. I think you should factor in a 15% management fee even if you think you'll self manage – your time is also valuable so "hire" yourself but not for free. Here's the nice thing about STRs, if you make these look like desirable vacation rentals, you can get each one of these unit to generate $37k annually ($160 per night * 365 days * .64 occupancy rate). I based those from airdna.co.
Hope this helps you analyze the deal with more detail. If you need some help with any financial modeling let me know. The key is make sure you can have STRs on a 4-plex in St Pete Beach... have your realtor check that to make sure or ask a local PM.
This type of piping could definitely be an insurance issue. If there is a significant amount of this throughout the property, it would be an expensive job for sure. Especially if you are looking to get in with a low down payment & minimal cash out of pocket. On the note of insurance, I encourage you to get a flood insurance quote on this property as well. Flood insurance in this area (and HOI for that matter) have gone absolutely nuts. It is also rising massively year over year, so something to consider in your underwriting.
For your first deal I would certainly lean more towards a property that needs cosmetic work only. Major reno's, especially right now, can be a major cash killer.
Your mortgage broker sounds like he is unfamiliar with owner occupied lending on 2-4 unit properties. I have seen/heard nothing saying they have done away with low down payment loans for owner occupied multi's. on 3-4 units FHA is likely your best bet. Conventional on 3-4 units is going to require 20% down. On 2 units you can do 5% down conventional. I prefer conventional to FHA for PMI purposes, if conventional is available on the specific property.
25% down is only required on 2-4 unit multifamily investment loans. Owner occupying, 3.5-5% is widely available.
@Ilan M Aliphas thank you!! I appreciate your input!