Buying first multifamily property

[Emily Shrub]

Hello all, My partner and I are looking for a multifamily property to buy so that we can live in one of the units. I've been using the bigger pockets rental property calculator to look for a good deal however there are none for us.

We only have 3-5% to put down which messes with the ROI. Then when I calculate the rent income for all but the unit we would live in our cash flow is largely in the negatives.

I'm wondering if I should be looking at the data differently. Maybe to see the negative cash flow as our new monthly rent? But what about these atrocious ROI levels?

Thanks,
Emily

[William Sing]

Hey Emily! Congrats on analyzing deals!

I'm not super familiar with the Euguene area but if it is anything like Portland a lot of small multi-family are not penciling out to cash flow year one. One thing to note is that you do have a very low down and this is going to be a place to live. This is one of those things where if you can get it to cashflow within the first 2-3 years it is a win. 

Oregon also has rent control which is another factor to consider. We are capped at 7% + CPI (Consumer Price Index). This fall we should be getting an idea of what CPI is but it will probably be 6-8% which means that you can be a bit more aggressive in the first couple of years of raising rent, but know that it is not a long-term rate. 

I would also consider your rent as part of the "full rent". Unless you are renting by the room it doesn't usually pencil out since bigger cities in Oregon are more equity driven than cashflow driven. 

If you have any questions feel free to DM me. Note that I only check BP once every week or so and if you want a quicker response just take a look at my page for contact info. 

Here is a video of a recent deal analysis as well. https://vid.us/ljqr3p