Investing In Stabilized Small Multi-Family (4 Units Or Less)

[Hannah Smith]

Hi all!

Hope everyone has had a great start to their week! 

For those that have purchased small multi-family (under 4 units) - if those properties cash flowed well and you bought slightly under market - did you have a plan OR a strategy in place to increase the NOI and upside potential of the property? Or did you go into the property generally happy with the performance with the idea to maintain cash-flow?

I know for larger deals (50 units, 100 units, etc.) there is usually capital improvements and strategy baked into the acquisition to improve the asset and raise rents but is this something that should be applied on a smaller level? Have you found that is even possible? 

For some of the smaller deals I am looking at, the market rents are seem to be as high as they can go and there aren't the economies of scale with regard to capex you'd receive in a larger property even those these deals more than meet the 1 percent rule, etc.

[Justin Kane]

hey @Hannah Smith you should always go for forced appreciation, but you should ALWAYS buy based on actuals for that time not projections. Also sometimes we buy large multifamily that is new construction and only 4%cap rate because its in the right location and doesnt need work.. so no forced appreciation there, just good planning for safe returns.

Did that help?