First multifamily

[Dannie Barlow]

Working on buying my first multifamily. It's an 8-plex in a b- c neighborhood. I know the area pretty good. 7 units are already rented for about $600 each, 8th unit needs a total rehab. Price is $290k. There's a lot of maintenance that has been put off, owner lives over 1000 miles away. Property management is lacking, all but 1 unit is on a month to month lease because the old lease has expired. They are accepting partial rent payments and not evicting in a timely manner. It will be a though process to get it back operating correctly. Any tips or ideas going into this?

[Justin Fernandez]

Comb through the Michael Blank, Ben Leybovich, James Wise, Serge, and a few other serious Multifamily investors. Their podcasts offer a lot of insight to boot! They walk you through a few things and things to think about. From stabilization, turnovers, raising rents, understanding market conditions, wether or not things are common vs not common for you area and what it can support. 

[Ned Carey]

In addition to any normal evaluation you would do of the numbers, be sure to calculate in the cost and time factor to bring it up to its potential. 

Many new investors forget to calculate that income will likely go down as you are upgrading the property.

[Jeff Greenberg]

It is also likely to go down when there is a new sheriff in town.  We turned 16 units on a 62 unit property within 2 months of closing.  Slow payers are likely to jump ship with new ownership.  That is a good thing, but plan for it. 

[Pete Sailhamer]

$290k seems a bit high for that.  I'd try to bring the price down a little.

[Kathy Stewart]

Congratulations, Dannie. I invest in the Texas market and have property management coverage in Dallas-Houston-Austin-San Antonio-Lubbock-College Station-Tyler. Let me know of any partnering interest you may have.