Newbie trying to figure out the deals

[Nate Boyce]

Hello Bigger pockets community. I am just beginning my endeavor in real estate investing, and I have been trying to soak up as much information and knowledge as I can find. I am located in the Midwest about an hour south of Chicago. I am interested in finding multi family properties because I like the idea of the security blanket that multiple tenants offers me. 

As I look around my market I have found a couple of 4 unit buildings that really spark my interest. The problem is that when I plug the numbers into a cash flow calculator they honestly seem almost too good to be true. I’m coming up with a cash on cash return of almost 21%. Is this really a feasible number? Or am I missing something in the calculation? I plan on managing the building myself at least to start off so I’m not figuring management costs, but the numbers I’m getting are showing a cash flow of around $12,000 per year. 

I really want to pull the trigger on this, but capital is also an issue for me to get conventional lending. Anyone out there have any advise for my situation? Thanks 

[Matt Popilek]

Glad you are plugging in @Nate Boyce! If you can reply with the numbers you are using in your calculation it would be helpful to better understand if you are calculating the return correctly. Also side note I always include a management fee whether I am managing it or not...you should charge yourself the fee so that you are paid for the effort...also it is a expense on the books for the property. Also when you are negotiating you can use the 10% cost in your advantage in negotiating a better deal. The Seller doesn't know who is managing the property and the 10% cost is legit cost in most cases. I am hitting way higher than 21% CoC on my deals...so simple answer is Yes 21% is possible all day every day!