Long Term Rental Analysis - Multifamily

[Matthew Posteraro]

I am in the phase of practicing deal analysis on possible investment properties in the area I am looking to invest in. The property would be a multi family that me and my wife would live in one unit and rent out the rest. Where I am looking for guidance is we plan on using a larger down payment of at least 50% to be on the conservative side of leverage. Using this to measure cash flow and a few other metrics seems to make most properties I run numbers for very good opportunities. I am afraid we will fall for a property with a false sense of a good deal.

Are there any suggestions to help me run an analysis that would better account for the larger down payment and allow me to better analyze potential properties in the future. Thanks in advance for the advice!

[Benjamin Aaker]

Matthew, have you read Gary Keller's The Millionaire Real Estate Investor yet? Good mindset stuff at the start an great underwriting education at the end. I totally recommend it.

Down payment: Can you give us some of your reasons for wanting the larger down? Many of us want to save cash to be able to purchase the next one. I would caution you against increasing the down payment to make the numbers work. This will also make your cash-on-cash return go down. This is definitely a metric you should be using (among others).

DM me if you want a quick underwriting spreadsheet I wrote. It won't tell you which property to buy, but will help you weed out the bad ones.