Cashflow in Multifamily?

Question

BiggerPockets community,

I have heard a lot of different numbers in regards to what you should expect as your cash flow on multifamily properties after all expenses are paid. Im looking for some feedback from active operators with at least 24 units. I have heard some say $100 a door is good, while others have said $250 min. What are you getting on your units per a door?

Taylor L. · Answer

I prefer to target at least 8% annual return from cash flow. Our overall returns include proceeds at sale, so the total return is going to be more than that. We'll always have a period at the beginning where occupancy drops due to evicting non-paying tenants and fixing up their units.

I don't look at it on a per-door basis for the reasons @Michael Le lined out.

Michael Le · Answer

I don't think many of us calculate it that way. You can cash flow $500+ a door if you pay for the property in cash but your COC might be really low. Most people probably have COC or IRR return targets they try to hit and not cash flow per door.

Nik S. · Answer

@Willie Smith

I own apt buildings in C/B areas, leveraged, making $100-115 per door. Give or take. These numbers are based on being a passive investor.

Willie Smith · Answer

@Michael Le

Very good point. I’m assuming people are using leverage if they are buying Multifamily. Your right in regards to COC and IRR. For the average investor IRR can be a little complicated so that’s why most people like to dumb it down to a cash per door basis. I’m personally looking for 15% IRR on my Multifamily deals in NC

John Voss · Answer

@Willie Smith I would say it totally depends on location/market. It should be more based on cap rate.

Nik S. · Answer

@Willie Smith

Not all, most purchased at FMV (fair market value). After expenses including PM fees and debt service, this is what is left over per rented unit. Give or take.

Greg Dickerson · Answer

It’s really up to you, the property itself and your plan, there is no size fits all  A lot of it depends on the business plan and back end value as you may be negative for a period of time until you complete the plan or exit the property. You need to evaluate the life of the investment and measure that in relation to your return requirements.

Cashflow in Multifamily?

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