What’s the Reality of Acquiring Positive Cash Flow Multi Family

[MARK F.]

Greetings!

I am seeking the knowledge and experience of seasoned Multi Family Investors.

Investing in Multi Family Buildings has been a dream of mine for several years. A few months ago I graduated from dreaming to educating myself. Now I’ve moved onto the next logical step of drafting a business plan, which I am currently in the process of.

Here’s my question:

What is the reality of finding a small, value added multi-family building with a positive cash flow given current market conditions?

* Assume financing with a standard LTV and a competitive market rate on a commercial mortgage.

* By small multi-family I mean approximately 8 – 32 units.

* By Value Added I mean the property’s value would be increased from relatively minor improvements, increases in management efficiency and/or increases in occupancy.

* For the scope of this question please eliminate considerations of the investors personal time and efforts that could be allocated elsewhere to generate income.

[Al Williamson]

Hey Mark,
I own an 8-unit and bought it with positive cash flow. It had code enforcement liens against it, drug dealing, and prostitution issues as well. So the discount in price reflected the sizable problems I needed to sort out.

If you're looking for an owner to give you a turnkey investment with a lot of cashflow and equity still on the table - well.... it could happen, but I don't think it's likely.

I'm an advocate for buying small well-built multifamily apts with dysfunctional issues. The social issues can easily be resolved by organizing the community and tackling blight (with persistence). You'll soon end up with a cash flowing property surrounded by neighbors who want you to succeed.

Add "place making" and neighborhood restoration to your business plan if you want to consider a larger pool of properties that match your criteria.
Good luck!