Small multi-unit pitfalls?

[Mark H.]

Hello all,

This is my first real post besides my initial introduction post, so please be forgiving if I commit some faux pas. :)

I am a long time incidental real estate investor that is looking to turn a "seat of the pants" level of past investing into a true business that would, in time, provide enough passive income to replace my current employment income.

In the past, I have considered multi-unit buy and hold rentals for their income potential. Lately, with a bit of research (during which I discovered biggerpockets), and I believe that for me multi-units might be a good fit. Doing a bit of math, I find that they could provide a good cash flow for a relatively small amount of up front capital.

I read through the Ultimate Beginners guide, and I see where the standard formulas for cash flow makes sense over time, but even in a multi-unit rich city, I do not see how the 2% rule can be accomplished. All the mutli units I find are well outside this standard.

I have been lucky enough to bumble through a few rentals over the years, but I would like to make sure I don't screw up to badly. :)

If anyone is nice enough to be willing to share, what seem to be the most common mistakes people make starting out in multi-units rentals?

I would absolutely love any feedback anyone is willing to give.

Thanks!

[James Klafehn]

I am a buy and hold guy but I am a product of my environment. Each and every investor needs to analyze their market and figure out what works best for their market. In my area $150,000 gets you a beat up old house built in 1890 that needs a ton of work. Its a wealthy area and there arent many foreclosures. But on the other hand, rents are extremely high. So for me it makes sense to buy a multifamily and rent it out. I have found that 4 units are best because you can still get a residential mortgage on them. They are also easier to get a loan.

Every area is different. Look at your area and see what the best path is.