Profit/Cash Flow ratios and requirements on multi-family investments

[Peter Vuong]

Hi All

Forum Noob here, just curious what are your rules or requirements for profit/cash flow prior to making an investment on a multi-family unit? I'm currently looking at an opportunity to buy a 2 family for $260K. I plan to put $10K down on a 30yr mortgage at 4.5%. I estimated the mortgage/tax/insurance/water will total about $1750, Currently both units are rented with a total rental income of $2350, although I may decide to raise rents slightly. That would mean a profit of $600/month or 34%. Thats without putting any estimate for additional required maintenance. Would you pull the trigger on this deal based on this info and what other considerations am I missing?

Look forward to hearing some of your feedback!

[Kyle Hipp]

Peter, to sign up for an owner occupied mortgage and to not live there is mortgage fraud. It is best to not start on the wrong foot in thus business. It is simple to find good deals for the first couple properties because of the ease of financing options so if you feel you need to cheat now, you really won't make it going forward. I recommend buying your first property as an owner occupied and then actually living there and renting out the other section of the duplex. This will lower you living costs and get you some experience in landlording. Good luck