Looking at my first multifamily

[Richard Palmer]

Hi everyone. This is my first post. I have been reading alot and learning a ton. Obviously with any risk there is some fear, especially when you make the move. 

I have a few books on the way to help me; "Rich Dad Poor Dad," "Building Wealth One House at a Time: Making It Big on Little Deals," "The Book on Investing in Real Estate with no (and Low) Money Down," and "Recession Proof Real Estate Investing: How to survive and Thrive in any Phase of Economic Cycle."

Going to take my time reading these and take notes when I do.

I am looking at a multifamily property, a 3 unit. It's on a fairly busy main road without a really a "neighborhood." It also has a two stall car garage which currently is not used. It is a very deep garage, you could easily fit 6 cars in it. The garage needs to be repainted and windows fixed.

I did a walk thru off the house. Definitely needs some work or revamping. Nothing crazy, just making it more presentable. The current owner let some stuff go. Since it is a 3 family, I feel that it would bring some consistent cashflow. That cashflow would be saved for the time being for emergencies and repairs to the house, until I can pull the equity from there for the next property.

My question is with the risk of the investment. How should I assess if this specific property is a good buy. In my mind there is the potential, but may not be ideal for future tenants if one were to leave, plus the work. I am also considering when financing, I would get a mortgage that can be fully covered by two of the tenants. I also am beginning to question why a current landlord would let it go.

Thanks for any advice in advance 

[Anthony Nunez]

In addition to some of the suggestions mentioned, I would also research if the building has any violations or anything that would cause a hurdle for you to have the units rented as soon as the sale is complete. 2 of the 3 units covering the mortgage is great, but are the units fairly equal in style/rental demand or is the 2 of the 3 units much bigger than the one you are not factoring in? If the 2 units pay 60% of the expenses sounds safer. Usually more units offer more safeguard in the event of a tenant not paying or a unit causing issues. If the house is being delivered with tenants ask if you can pre-screen them yourself with your own systems. All the best