How to make the numbers work on a multifamily property

[Jim Owens]

Hello

I have been doing lots of research into real estate investing and I believe buying and holding duplex/fourplexes is the best option for me at this time.

Most of the deals I have been looking at are similar to this example below:

$288,000 Purchase price

$74,880 Down payment ($57,600 -20% down payment+ $17280 closing costs 6%)

$230,400 Mortgage @ 5%

$2100 rental income

-$1236 (Principal and interest)

-$500 (Taxes, Insurance, utilities, vacancy)

$364 left over each month

Assuming everything goes right and there are no issues (yeah right)

If I put down the $75k cash out my pocket that would be less than 6% cash on cash return.

If I borrow the 75k down and split with my investor 50/50 it would be a greater return on my basically 0 out of pocket but a terrible return for the investor.

Is this just a bad deal or is there a better way to structure it? I truly want to scale my real estate investing business by using investors for down payment source because I would run out of money after a deal or two and I want to keep reserves if anything was to happen.

To me this rent seems very low also. I would like it to be closer to 1% of the purchase price which would be $2800 a month instead of $2100. I’m sure this could gradually be raised but would take some time.