What is the successful cash flow number for multi family success?

[Joe S.]

I have been reading post over the last number of years about why to go multifamily investing / apartments. I thought it would be great to see what the anticipated monthly cash flow after all expenses are for a successful multifamily investor. I know of a number of Investors personally that has a modest portfolio of single-family houses that is producing 12 K a month. It appears to me like some of the people flexing their investing muscles and talking big game may not be profiting anymore then the mom and pop operators that are consistently buying single-family housing.

[Carlos M.]

@Joe S. We both worked very modest jobs. I was an automotive tech and wifey worked for a local hospital. We started out with $60k in home equity. We purchased value add properties improves them did a cash out refinance and kept that original $60k growing. We never spent a penny of the cash flow and just kept reinvesting it... the power with multi families is in the cap rate. For example our last 3 properties we purchased look like this.. 3 years ago purchased an 11 unit for $600k. We spent $25,00 to rehab it and increased the NOI by $2,500 per month. The increased value looks like this. $2,500 x 12 months = $30,000 annually. Divide that by our market cap rate of 7% gives you an increase in value of $428,571. So now that property has a value of $1,000,000. We did a new loan at LTV AT 75% of the new appraised value. We walked away with $300k at settlement. We deployed that cash into a 16 unit for $1,100,000 last year. Did a similar process and we just bought a 29 unit for $1,700,000.... it's the ability to force the value through increased NOI where the real leverage is in multi family. I'm SURE single family would be easier to manage. But you can't get that kind of appreciation in a few months. That deal I talked about where we pulled out $300k... that Reno took me and my maintenance man 5 months! That's some serious equity build up. You have to decide what works for you and your goals.