Trying to buy first multifamily but seems impossible....

[Matt Keller]

So I came across this blog post and when I saw the first example for a Multifamily unit, I frowned thinking I had gone wrong somewhere.

Let me preface this by saying I'm completely new but I just don't see how a 300k mortgage can be paid with 1600$ when including taxes, PMI and insurance. Help me see the light!?

Perhaps I need more guidance on how to properly assess these costs but I've spent maybe 6-7 weeks now (a lot on BP), educating myself when I have time, so I can position myself for my first real estate purchase. I've spoken with several lenders about going the FHA route to purchase a multifamily unit and have excellent credit.

The estimated mortgage payment I came back with on a 275k FHA Loan…

FHA – 3.5% Interest Rate

Down Payment 3.5% – $9625
Mortgage Insurance – $298.55 (Monthly)
Taxes – $580.00 (Monthly) – Estimate
Hazard Insurance – $150.00 (Monthly) – Estimate
Principal & Interest – $1511.06 (Monthly)
Total Monthly Payment – $2539.61

So…. where am I going wrong here? It can’t be taxes since even if we eliminated taxes from my real world example I can’t even come close to Brandon’s 1600$ target for a 300k mortgage.

Perhaps this isn't the best place to ask but clearly I need help. Maybe my problem is simply in the estimates I’m using/being provided or perhaps its all the lenders I’ve spoken to? I just don’t get it….

I can find a way make a good real estate investment for a multifamily home with a 1600$ mortgage, insurance & PMI expense. I can't do it (at least in my area) for 2600$

Help!?

[Michael Seeker]

 You're going wrong trying to make a $300K property cashflow on $1600/mo in rent.  It's not going to happen unless you put around 50% down (please don't do that!).

Are you looking at property in Columbus, OH or on one of the coasts?  Many "investors" buy properties with GRMs of around 200 (200*$1600 = $320K) in expensive areas and hope for appreciation.  I imagine Columbus is like many of the other rust belt cities and you ought to be able to find tons of properties in pretty good areas with GRMs around 100 and if you're willing to go into rougher neighborhoods closer to the 50-75 range.