Cash Per Door Expectations

[Kevin Sack]

I am actively seeking my first multifamily deal in the Norfolk/Portsmouth area. Am I off base for trying to get $150/door net cash flow on a quad that rents 700/month? That tends to put me at 80-85% of most asking prices with all my expenses and 20% down conventional financing.

Kevin

[Renard Miller]

Hi, Kevin. My wife and I have four multiplexes in Hampton, VA and our returns are in that range. We've gotten lucky to get closer to $200/door on some, but I would say $150/door is a reasonable basis for offers. Your mileage may vary in Norfolk/Portsmouth, but I can't imagine it being so different as to make such an estimate off base.

[Kevin Sack]

@Renard Miller thanks for the response! Seems like people are holding onto their appraisal values as people are eventually paying that price, they might just sit on the market a little longer. I'm determined to find that motivated seller that makes the numbers work!

[Jonathan New]

@Renard Miller, is that a net or gross $/door?  

[Renard Miller]

@Jonathan New that is net vacancies, expenses and taxes. It is definitely not achievable on every listing, but every now and then they pop up or we are successful with one of our strategies for finding a property not yet on the market.