How long to wait for profitability

[Michael Weis]

I'm looking at a 4-family in a town where I have other properties where I did not know what numbers to run. Those were mistakes but I live in one, so I can live with that, so to speak. I am not eager to make the same mistake three times, however. Now that I've learned what numbers to run, I see that this particular property will not cash flow for at least a 1-3 years. It's not a BRRRR and I will end up having to sink a fair amount of capital into it, including converting from oil heat to gas in order to get the tenants' utility bills off the books. With the utility bills that the owner is currently paying, there's no way this property at this price would ever cash flow. Without them, and at full ask, it will still take 2-3 years of raising rents before I see a modest 2-3% cash on cash return with a cap rate of about 1.5%. My agent says I need to look down the road rather than at what the numbers are now, as long as I'm not losing money. But even as I look down the road, as rents rise and the property appreciates, the ROI and the cap rate will stay the same, unless I'm missing something. Should I even be wasting my time on this, or is this a potential gold mine and I just can't see it?