Investing in Multi-Family to Generate $10K-12K per Month in Cash Flow

[Vasundhara Ranjani]

As the title says, I would like to purchase a few (or a couple of larger) multifamily properties to cash-flow at least $10K per month (ideally $12K/mo.).

The criteria are mainly:

-B-class properties/locations (i.e. no "ghetto" properties)

-Professionally managed by a reputable/trustworthy company (not fly-by-night operations)

-Looking mainly in Texas DFW, San Antonio, Austin, Houston) & Wisconsin (Milwaukee and surrounding areas)

What kind of investment would this require? I know it varies by location etc. but ballpark? What $ amount do I need to invest to be able to generate at least $10k per month in cash-flow?

[Marcus Auerbach]

Quote from @Vasundhara Ranjani:

As the title says, I would like to purchase a few (or a couple of larger) multifamily properties to cash-flow at least $10K per month (ideally $12K/mo.).

The criteria are mainly:

-B-class properties/locations (i.e. no "ghetto" properties)

-Professionally managed by a reputable/trustworthy company (not fly-by-night operations)

-Looking mainly in Texas DFW, San Antonio, Austin, Houston) & Wisconsin (Milwaukee and surrounding areas)

What kind of investment would this require? I know it varies by location etc. but ballpark? What $ amount do I need to invest to be able to generate at least $10k per month in cash-flow?

Your objectives are mutually exclusive. You have two ways to get to 10k cash flow. 

One way is to go buy in a rougher neighborhood, buy a property that is not fully rented, needs work etc and get it repositioned. You'll need about 30-50 units, $2-4M in assets leveraged at 70%, so 600k to 1.2m down. It will take some time and effort to get that done.

Or: if you want to be in a B class asset thats already stabilized you'll have to pay a premium, which means you are either not going to cash flow for the next couple years until rents have moved on or you'll have to bring 50% down on a nice 5M asset.

Of course, why the heck would anyone invest that much cash for 10k in cash flow? It does not make sense, there are easier ways. The reason goes back to RE investing 101 - you make money on equity, deleveraging, apreciation and tax shelter - cash flow is actually the smallest, while still absolutly vital to keep your biz alive. 

Milwaukee is probably one of the better areas to do this, but while priced low, we have been in the top 10 most competitive markets in the US in 2023 to buy and from a renters perspective MKE is ranked #3 per rentcafe's 2023 report - both based on a chronic housing shortage. More on my YouTube channel.