Buying multifamily new or used?

[Leeann McGee]

Hi.  I'm new to the investing world and any advice from investors is appreciated.

I have an opportunity to 1031 exchange into a new multifamily unit, construction to begin summer 2020.  There will be no cash flow for a year.   

My questions are:  Is this something a new investor should delve into, new construction with no cash flow for a year?  

The pro forma on the fourplex suggests $600/month cash flow when it is fully leased in a year (or possibly longer).  Does this sound like a good return?

Would it be better to 1031 exchange into multiple turnkey single family homes that are already established and can cash flow within a month to two months?

I'm looking for multifamily, but I guess I'm unsure if new construction is the way to go.  It sounds like a good idea because there will be little to no maintenance for a while since everything will be new. (The new construction multifamily investment will max our 1031 monies.)  It just seems like putting "all my eggs in one basket" and waiting a year to earn cash flow will delay my investment opportunities and journey.  

Thank you for your advice.

[Taylor L.]

All interesting questions. First, is $600/mo cash flow good? 

Answer: It depends. $600/mo based on how many dollars invested? $600/mo on a $1,000 investment is an absolute steal. $600/mo on a $1 million investment is bad. Equally importantly, where is that $600 figure coming from? The developer selling the deal, your own numbers, or an impartial 3rd party market expert?

The great thing about new construction is that major systems will last a long time. Older properties can need new roofs, new mechanical, plumbing repairs, and other expensive things.

I would look for existing multifamily with tenants in place and cash flow. That pro forma cash flow on this new development may never materialize.