Looking for First Real Estate Investment

[Gaston Chavarin]

I have always had a desire to invest in real estate, I currently own a SFH in Oregon where I live. I've been happy with the investment, however I'm looking to expand to MFH as it looks like the ROI seems to be better. I have done some research and I'm only seeing duplex, I feel like the only way it would be worth while would be to find a triplex or a fourplex. I have done a lot of research in the state of Ohio, and went as far as talking to a real estate agent in Toledo Ohio. I found one that may have been promising, however after doing some research it was a SFH converted into a Multifamily. It only had one meter for all four units, does anyone have experience with investing in that area and also do you know if that will be an issue with the lending company. Any feed back is appreciated.

[Michael S.]

@Gaston Chavarin

I would skip that one. My experience with Toledo small multifamily has taught me a few things. Be very focused on the criteria you set out for these properties. The right neighborhoods, the right zip codes, separate meters, property conditions, existing leases, rent readiness, etc. Here’s an example of what I set for 2-4 unit criteria in Toledo:

• 2-4 Units Criteria – Rent Ready ~ $20,000 - $25,000 per unit. Target rents $585+ per month per unit. May consider right value-add opportunity with creative financing / owner financing. Separate meters: Gas, Water, Electric. If we must pay water, or gas, price must reflect discount to meet $200 door free cash flow. Account for utilities. For utilities back out a 14 CAP impact on premium value; Gas $1344 annually / 0.14 = $9600 down adjustment for offer price. Neighborhoods: Deveaux, Franklin Park, West Gate, Elmhurst Elementary, and Washington Local School District. Deal must pass analysis looking for $200-$300 per door free cash flow.

I personally think the right SFR is the way to go in Toledo. There is plenty of opportunity and value in Toledo.