Great Opportunity for 1st Multi Family Deal

[Michael Dallas]

Hey BP! I am a young investor that got the opportunity to make a big jump in my investing journey. Just a little background: I am still a senior in college, and I own a single family rental that I house-hacked last year. Through a lot of conversations and connections, someone has presented me with the opportunity to buy an 8-unit multifamily property. They are an older investor that bought the property for their son to run, but he decided he was done with it and moved back home. Obviously, a lot more due diligence will have to be done, but the basic numbers right now look incredible. $480,000 sales price, and all 8 units are rented out at $750 but could easily be raised to high 800's or even low 900's. While these numbers have gotten me interested in the property, I don't know what I don't know. The man selling said he knows he will lose money on the deal as the property already appraised for $560,000 but would love to get a young investor like myself into the game since his son did not end up sticking with it. He owns an incredible amount of real estate and is not worried about making a bunch of money on this. So I just wanted to put this out here to see what advice I could be given from everyone about investing in multifamily. He is a great guy, but I want to make sure everything checks out and not just take him at his word. What are some things I need to do to run all the right numbers to make sure this is a great deal? Thank you to everyone who responds! 

(Sorry I know this was a long post)

[Scott Allen]

@Michael Dallas

Sounds like a really good deal. You might need to find a commercial lender since it's over four units which might have its own difficulties. Just make sure to have an inspection period to check out all the units, review leases, make sure tenants are paying (are leases month to month, when leases go through, everyone paying on time or are some behind, how long have they been living there/did they just moved in). Account for any maintenance and repairs that might need to be addressed sooner rather than later. If you're planning to raise rents over time - would be good to get a bid from a contractor to figure what it would cost to fully redo one of the units so you have a template of what it could cost to redo all of them. Also, try to find similar rental units in the same neighborhood to compare to so you have more of a rent range/conservative approach. 

Sounds like his son is a dweeb/lacks work ethic.