Multifamily purchase comparison

[Michael Mobley]

Hi,

Just looking for opinions comparing 2 different deals in the works.

Would you rather? In this case similar price points. Both will be managed by a 3rd party. Both slightly below market in rents.

A. 30 units in a better market- lower cash flow but stable. Value add opportunity but not necessary.- also this one is nearby.

B. 60 units in a smaller market; lower rents with similar value add. Much more cash flow positive. Likely less appreciation than property A. Value add but also not necessary.

Obviously lots of details come into play. Let me know your thoughts and suggestions.

Thank you for any input!

[Eric Mielke]

@Michael Mobley It's a good question and lots of other details come into play at the end of your post like you said. It also depends on if you're looking for higher annual CoC return or can wait for a bigger profit/IRR at the close of the deal.

Personally, if we have to choose between the 2 markets, we'd go for the better market, and by 'better' I'm assuming that's higher population and job growth. As long as the deal in case A has the CoC/IRR you're looking for, then that's the one we would prefer. It's likely you'll have a larger buyer's pool for case A as well. Add the fact that it's a nearby property and that would definitely make A our pick.