50 vs 150 unit Bldg - Average net cash flow per unit per month
I'm looking at both 50 unit and from 100 to 150 unit buildings and just wanted feedback on what would be an average or expected monthly net cash flow per unit. I've heard the standard $100 per door discussed as a conservative benchmark but just wondered everyone's thoughts on that, especially as it scales from 50 units up to 150 units or more. For the sake of this example, figure Class B or C apartments and typical mgmt & OH expenses.
- Rory Cummins
Most Popular Reply
I don't necessarily look at monthly cash flow per unit, I look at the overall investment and consider CoC, IRR, amount of effort/risk with project and more. If you pinned me down on a number I would say that I'm shooting for $200 per door (after stabilization), $100 per door is not going to cut it. I don't think there is much difference between your numbers on a 50 vs. 150 unit+ building when your talking about a rule of thumb like $/door.
BTW, I wouldn't call $100/door a conservative benchmark, it is pretty aggressive/risky actually. If you underwrite at $200/door and you end up at $100/door, fine. If you underwrite at $100/door and end up at $0, not so fine. There's just not enough meat on the bone to underwrite and purchase a deal for $100/door unless you have goals/strategies that are other than cash flow.