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Updated over 8 years ago,
How do you look at cash flow?
Hey BP. Currently I'm close to putting my first SFH under contract. And I plan to stay in the SFH field until for a few years. I want to get well established in SFHs. After I've grown my portfolio with houses and feel I'm ready to start looking for apartment complexes I'll stop. since I'll be in the single family field but want to head to multi family, I have a question.
Since I'm buying SFHs it's easy to determine my cash flow (after debt services, maintenance, repairs, capex, vacancy and property management). It's a single unit. I deduct all my expenses and once I've grown my portfolio I can easily look at what's my actual cash flow (after expenses) per unit. More importantly, I look at my ROI. As we all know, I can be cash flowing $300/house but what does it really do for me if my ROI is 3%?
So, my question is, how do you look at cash flow for multi family? Can you still accurately look for any $/unit? 200/unit? Or do you aim for a certain ROI percentage? Any kind of "rule of thumb"?
With houses I aim for 200 minimum after expenses. 220-250 preferred. My houses purchase price is roughly $55k. With 20% down its nearly $11k. After all expenses I'd be getting $220-$230. Not bad. Easy to calculate. So I aim for a certain dollar amount for cash flow.. But t also has to fit my ROI requirements.
But any experienced large multi family owners, how do you look at it? What sort of cash flow would you expect out of a B class 100 unit property relative to where you look for these properties. With properties that fit my criteria I look for 200 cash flow like I mentioned. So I'm just wondering if you can look at apartments that way. Sorry for a lonnnng question but I tried to be as detailed as I could. I see a lot of people ask really basic questions like "how much cash flow per unit is good" but don't specify the condition of the property, price, or location. So again, sorry lol. I look forward to chatting with anyone about this. Have a good day BP!