Potential FIRST Multifamily Purchase (Need Advice)!!

[Cole Doyon]

Hey guys,

This is my first time posting on BiggerPockets, and my first time I am actually heavily considering a deal. 

This is the BiggerPockets Rental Calculations: https://www.biggerpockets.com/...

I feel like I used rather conservative numbers there, and the property still cash flows extremely well.

Am I missing anything? I know Akron has a high crime rate but still... I feel like this is a steal.

What are your guys' thoughts? I would really appreciate any advice you guys could provide!!

[Joshua Michael Hauman]

Hey @Cole Doyon,

I'm local to the area and agree that the numbers you used for rents are not unreasonable. 

Some assumptions I would test you on would be vacancy and maintenance. 

Every investor is different but just some call outs I would mention:

1. Vacancy: Akron is a secondary market and can be great for cashflow its getting the management right which is the difficult part. Keeping the property occupied is likely going to be the biggest hurdle you will face. In most cases you get what you pay for C- to D class properties/areas attract C- to D class tenants. If you have a strong PM company and a plan to keep it managed that will help mitigate your downside but like Mike Tyson once said, everyone has a plan until they have to file two evictions in one month. Or something like that :)

2. Maintenance: How I look at conversions is this: The property was built specifically for one type of housing and then later changed into another. I know, captain obvious. Its all a case by case basis. Issues with a converted property will depend on several factors, including the quality of the conversion work, the age and condition of the property before the conversion, and the maintenance and management of the property after the conversion. Converting an older property may mean that it has outdated or inadequate insulation, heating, or ventilation systems that could lead to maintenance issues and higher utility bills. It may also mean that the work was properly permitted, up to standard and have newer electrical and plumbing systems, modern insulation, and updated heating and ventilation systems, which could be advantageous in terms of energy efficiency and maintenance. Just a consideration.

I have two pieces of advice my mentor gave me:

1) Balance the return with peace of mind.

2) When purchasing an asset you must understand you won't own it forever. The question then becomes, how do I unload this? Who would wat to buy this in the future?


Also, coming from a guy who underwrites over $1B in assets each year I've found its wise to approach the analysis process with the mindset of "Guilty until proven innocent". What I mean by this is you underwrite the deal with empirical skepticism and actively seek out every angle possible to kill the deal. In doing so you protect yourself from the downside as best you can. 

I can't help with agents in Akron but if you're looking for recommendations on contractors, lenders, property management or insurance feel free to reach out and I'd be glad to pass along some contact info for the folks that support the residential side of my business.