New to real estate investing

[Daniel S.]

Hello!

I am a total newbie when it comes to real estate investing and have recently began looking more into it.  I have come up with some savings and looking for a steady stream of income, perhaps from a multifamily.

Would love to get educated by all those who have been there and done that.

One question I do have right off the bat tho, I seem to see all these multifamily homes on loopnet with decent Cap rates and a decent NOI but when i deduct what the debt service would be for financing such a property even with 30%-35% down, I seem to arrive at a net profit figure of something like 5-6k/yr. Is that right? or am I doing my math totally wrong? (I've looked at properties in Phoenix so far)

Thanks!

[Kenneth Reimer]

@Daniel S. Evaluating the deals you're speaking of is impossible without a plethora of information. It all depends on what type of property you're looking at, the area, the age of the building, condition of the property, etc. The topic that will be important for you to look into, in order to learn about the topic your speaking of, is the spread between cap rates that investors are buying in at and interest rates on debt that they are putting on the same properties. 

Also, when doing your financial analysis, use it to find at what price the deal makes sense, not whether or not it makes sense. Far too many new investors look at a deal, find that the deal at listed price doesn't pencil out, and pass it up. The listed price is almost entirely irrelevant to what the property is worth. 

While I don't know the Phoenix market very well, I've heard that employment trends have caused many investors to look into the MSA as a potential market to acquire in. 

Feel free to shoot over any questions you have!

Kenny Reimer