Am I absolutely crazy here? (hint: probably.)

[Rick Petersen]

Okay, first of all, went through the free recorded session provided when you sign up, and it said you needed a plan to start with.  Before I share what I'm looking at property-wise, I thought I would share my plan... I'm so new, I'm still working on figuring out if properties and strategies fit my plan.

I want to not have to work high-income roles just to meet my family's spending expectations (working on fixing the expenses side of the equation too...)

   Because...

   I want more time with my family

   I want to be able to do leisure activities

   I want to not be so stressed all the time

I want to be wealthy

   Because...

   I want to be able to set up <special needs child> to be cared for well in the long term

   I want to travel

   I want to live where I want when I want

   I want to set my kids up, teach them and teach them to teach their kids

I hope to do this by setting up cash-flowing properties in the MidWest (Ohio, Michigan, Indiana, Kentucky, Missouri and Tennessee primarily). I am interested in either the BRRRR or just standard SF/MF rental strategies, understanding MF will cash flow better.

With that back-drop, I find an opportunity but it is a _big_ purchase and would be my very first. It includes many MF properties in a bundle. It looks to me, using the tax, insurance and current rent amounts provided, with 5% each cap expense savings, repair and vacancy planned in and 10% to a management company, that it would cashflow immediately. Small amount per unit, but at 40+ units, the cash flow would be around $2.7k/month. CoC looks to be low, 4.84% (predicted to hit 10.85% by year 10) and cap rate at 5.90%.

Now, I know the cash flow is super-low per unit, but if it's rare to find something that cash flows immediately, if it's diversified across a good number of properties and if we could be in for inflation and potential rent rate increases, does this sound like a good deal?  Would this be something that would be a good deal for someone with a lot of experience/big portfolio, or do the numbers on this just scream that it's an over-all bad deal?

Finally, if it sounds like an good deal (BP says the first one doesn't have to be a home run, you just gotta get on base), and know that I am local to all the properties so there's that at least, then... I'd love help working through what all would be needed in order to secure financing (not sure if that cash flow is enough to make it so that an investor would be 100% willing to dive in).  What would next steps be?  

[Theresa Harris]

How much are you going to have to spend to buy 40+ units and get a $2.7K/month return?  That is a LOT of units and not a lot of return.  If you have that much money to buy 40+ units, why not simply buy a few houses with good rent outright and make the same amount of cash flow (because your houses will be paid off)?

Then there is also the question of the quality of the tenant.  I'd rather buy a few good properties in solid areas than lots of cheap places where I won't have great tenants and will have higher turnover, more problems and higher costs.