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Updated over 3 years ago on . Most recent reply

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Jeff Gold
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Best formula to determine multifamily purchase

Jeff Gold
Posted

I’m curious what formula investors in this forum use to evaluate multi family investments…

For example, if property is 350k how much are you expecting to cash flow annually? (Net - after Expenses) I would probably attempt to put 10%.

Not sure if mortgage lenders  require more skin in the game with multi family investments. 

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Joshua Janus
  • Realtor
  • Cleveland, OH
1,493
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Joshua Janus
  • Realtor
  • Cleveland, OH
Replied

I like to use the One Percent Rule (monthly gross rent is >=1% of purchase price) as a rough rule for my market in Columbus, Ohio at least. Some areas that is never possible, and others it's every single property. Take into account all of the other expenses associated with the MF property as well. Does the area have high property taxes, hoa fees, condition of the roof, appliances, units etc. 
Are you asking whether lenders require a larger return as it is a multi family property versus single?
-Josh

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