[Calc Review] Multi Family in CA is hard to pencil

[Matt Steinmetz]

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I found this deal on the MLS. As I live in CA and have a STR nearby this listing, I thought I'd check it out. It's a 4 unit with all units currently rented on MTM by long term residents. The rent is currently around $1,550 per month and each unit is a 2b/1b. The numbers I used are based on the list price of $1.5 million and 25% down. The rent is under market but due to rent control I cannot raise the rent more than 10% per year. It will take 3 years to get rents to market value of around $2k-$2,2k. I guess I could end the MTM tenancies and get new renters at higher rents...

Currently I own 2 SFRs; One is a LTR and the other a STR. This would be my first multi family but it doesn't seem to pencil even with the market rents. 

It appears I'd have to offer well below list price to get near cash flow. The figures use came from the property mgr/Listing agent. What am I missing?