Multi family vs Apartment Complex First Timer

[Christina Morales]

Hey BP!

So I have been looking for a multi family 3-4 units in CT with no luck in my price range, $300,000 or under. No luck, there’s always “something” that makes it not worth it enough to put in repair and have it cash flow. So I was thinking, why not go all the way with an apartment complex, looking in a few different states.

I could have 30k cash and 70k equity on primary home for a total of 100k to put down on a 1M or lower. From what I see these properties claim NOI 70-90k after expenses.

So my questions are how much would my monthly mortgage payment be on that property purchase price 1M? Do these numbers sound reasonable or am I stretching it? Would buying a complex at 1M be profitable to me as far as cash flow after expenses are paid, what would you considered “good cash flow” using these numbers?

Thanks so much!

[Todd Dexheimer]

For a $1mm purchase you will need to have around $350-$400k. This includes a down payment of 25-30%, closing expenses, reserve account and due diligence costs. 

As for cash flow on a "good deal," that is dependent upon your idea of good return. For me, you need to look at a few things. First your cash on cash return, next your overall cash flow and finally your appreciation gain potential. You have other things to look at as well, such a neighborhood type, economic factors, management factors, building type and age and overall business plan/strategy.