Evaluating & Comparing 3–4 Unit Deals as an Owner-Occupant
Hey guys, I think I’m getting the hang of this thing — 2nd post!
I’m looking at different multi-unit properties in the Northwest side of Chicago and trying to figure out the best way to evaluate and compare them. Ideally, I’d like to purchase a 3- or 4-flat and live in one of the units, so I imagine my analysis is a little different than someone buying strictly as an investment.
I've been looking at things like cap rate, cash flow, and DSCR, but I'm curious what experienced investors consider their key "checks" when deciding whether a property is actually a good opportunity.
Are there specific numbers, ratios, expenses, or red flags you guys look for when comparing potential deals?
Would love to hear how you approach it, especially for owner-occupied 3- and 4-flats in Chicago. Appreciate any insight!
Most Popular Reply
Since you’re planning to live in one of the units, I’d look at it a little differently than a straight investment. I’d still run the numbers as if all the units were rentals, but I’d also look at what your actual housing cost is going to be after the other units pay their share of the expenses.
I’d pay close attention to the rents, taxes, insurance, utilities, repairs and what similar properties are actually renting for. And I’d look closely at the building itself. A deal can look great on paper and still have a roof, plumbing or other big expense waiting for you.
For a first property, I’d worry less about getting the biggest return and more about making sure the numbers are real and you know what you’re getting into. A good first deal doesn’t have to be perfect. It just needs to make sense.