Learning About Multi-Families

[Hilary Hageman]

What's the best book specific to managing small multi-families?

I've done a fair amount of research on single-families, but the cash-flow seems so much better with duplex-quads that I'm starting to consider it. 

What is different regarding tenant selection and management?  How do you attract good "home-owner" type tenants to a multi-family? 

[Levi T.]

No book recommendations, but happy to talk on it, pm me whenever.

It's all about cap rate in terms of value with apartments, so if rents go down the value of the building sinks with it, likewise if it goes up. You really want to find a property that is in an A-B area that is off market and lacking repairs. This will let you get it at a sub market value, then with improvements rent it higher. Just don't base your buy price off the higher rents, make sure you cashflow on the lower rents "as-is" type deal. Seller should take a loss as they want out of their bad investment, thus why they have put off repairs, no money.

I can't tell you how many P&Ls I've looked at, where the owner "forgot" to include utilities, as most building don't have sub-metering and include that cost in the rents. Good way to get burned as all building have one meter for water, and some have electric. Most include water, sewer, and trash removal. Maybe not the last one if your in a duplex or something, but remember it has one meter for water, and likely electric for the hallways, so that's cost. Always call the city and check the water bill balance before closing, and get the average. I have a 9 unit building that's 1/2 the cost for water and sewer than a 4 unit building in another city, so always check it before making an offer.

Repairs run in the 8.4% range, vacancy is much lower, but for a sub 4 unit I would stick with 10%. You likely have a landlord tax, it's normally not much, but good to check with the city. 10/10/10 is safe.

Buildings are less isolated, gossip and hive like mentality with renters. So if you do one a favor, they all want that favor as well, and will call.

Good luck!