Multi unit properties

[Kate Hayes]

Hey there,

I am running the numbers and seem to be finding the return on a tri-plex is much better than a single family home. I could expect to make $2200 a month with a single family home for $250K - Or $3000 for a triplex for even less. Why do these numbers seem to be "too good to be true?" Does anyone have experience with multi unit rentals than has some advice? 

[Mike Makkar]

@Kate Hayes, Multi-family have the advantage of much lower per-door prices but with closer rent-rates to that of single family homes. Concepts such as the 1% to 2% rule, where the monthly rent is between 1% to 2% of the price of the unit is much more achievable in a triplex or a 4-plex than an over-valued SFR.

In your 250k home example, if you get 2000 per month rental payment, you are only making .8% of the home price in monthly rent. However, for a triplex valued at 300k, at a per door price of 100k per unit, you could be 1000 to 1200 per month per unit, thereby surpassing the 1% rule.

For true cash-flow positive cases, I suggest finding properties way beyond the 1% rule and find properties closer between 1.5% to 2%, very achievable in Fort Lauderdale markets. Quick MLS check revealed a 2br/1ba 75k property in the market renting for $1250 or in other words 1.67%

Good Luck!