Multifamily Property Evaluation

[Elizabeth A Shatzkin]

We are moving up from SFR to multifamily on our next purchase of a rental property. We are somewhat skilled at evaluating a SFR, using all the tools, comps, etc., but it is not clear to us how to evaluate the 2-4 unit properties with the same "accuracy". Does anyone out there have a good way to break down these smaller multiple units so we can feel confident about our decision to make the next purchase? Thanks.

[Evan Polaski]

At the end of the day, all real estate is is any other business revenue needs to be more than expenses

The biggest difference between single and multi from my experience: multi you pay for landscaping. Multi you will likely have at least some of the utility bill for common area. Potentially more, if units are not seperately metered.

Insurance and taxes are still the same and can be understood before buying. Capex is nearly identical. Maintenance is likely similar, you just have more appliance sets instead of one. You may have common laundry, so you need to provide machines, but you can put coin operated machines in.

While I rattled off several things, you just need to add them in. Think about all the stuff you do with any house: your own residence, a rental that is vacant, and a rental that is occupied. You have utilities, learn care, repairs, trash collection, etc. All these same things are there in Multifamily, it just comes down to who has to pay for it and accounting for it, if it is you.

Best of luck. I know you will do great.