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.

[Gino Barbaro]

@Matthew Posteraro

It comes down to how much capital do you have to allocate, and how many units you are looking to acquire with your capital. There truly is no right or wrong answer. Some sleep better at night with zero debt, while others love to use leverage and are willing to take on more risk.

Community banks right now will go with 80% LTV. Most agency lenders, Fannie/Freddie have been asking for 65%, knowing that there was problems on the horizon.

You need to ask yourself where do you feel comfortable with debt levels

Gino

[Matthew Posteraro]

Gino, Thank you for the insight. Me and my wife are aiming to be debt free by the end of 2024, then begin saving aggressively for a house while maxing out our 403Bs. We see real estate investing as a great way to diversify our portfolio and do want to remain on the more conservative side, especially for our first property. 

We fee like a conservative approach will let us go through the growing pains of better understanding real estate investing without the worry of being over leveraged to add to the stress while we are both still employed full time in our careers and do not plan on quitting our jobs to go fully into real estate. 

[Matthew Morrow]

Quote from @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!

Hey Matt

It’s great that you’re practicing deal analysis and taking a conservative approach with a larger down payment. Living in one unit while renting out the others is a smart move. That said, I completely understand your concern about deals looking "too good to be true" when you’re putting in 50% down.

To avoid this, it’s best to analyze properties as if you were using more traditional financing (20-25% down). This gives you a more accurate view of the property's true cash flow and performance without relying on a large down payment to "force" good numbers.

This is exactly what we do — help investors like you evaluate deals to ensure responsible purchases that lead to portfolio growth. We use a custom spreadsheet and DealCheck to break down key metrics like cash-on-cash return, cap rate, and debt service coverage ratio (DSCR). Instead of focusing solely on cash flow after a large down payment, we analyze how the property performs with less cash in so you can see if it holds up. If the deal works with 20-25% down, it will only look better with 50% down.

The key is to stay disciplined. If a deal doesn’t fit your criteria, it’s an immediate pass. Stick to the numbers, period. That’s what makes you an investor, not a buyer. This approach ensures you’re making decisions based on logic, not emotion. We help our clients do exactly that — evaluate properties objectively, stick to their buy box, and make sure every deal fits their long-term goals.

If you'd like to see how we structure our analysis or want to review a few sample deals, we’re happy to share insights. Our goal is to make sure you’re buying properties that help you grow your portfolio responsibly. Let us know if you'd like to connect on this!

[Addy Chupa]

Quote from @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!

Hi Matthew,

It’s awesome that you and your wife are working toward becoming debt-free soon, and it’s great that you’re taking a conservative approach with a larger down payment. House hacking by living in one unit and renting out the others is a smart strategy to build wealth. Your concern about deals looking "too good to be true" with 50% down is valid, so focusing on a well-rounded analysis is a great move.

Tools like Cashflow Analyzer Pro with Deal Instant Analyzer can provide a detailed breakdown of real estate investments. They analyze components such as cash flow, principal paydown, appreciation (both home and renovation), initial equity, depreciation, and interest deductions for tax savings, giving you a clear picture of individual gains and ROI over 30 years. This helps you identify which factors drive the best returns and make confident, informed decisions.

It’s also important to test your numbers with scenarios like higher vacancies, unexpected expenses, interest rate changes, or rent adjustments over the years. This ensures the property performs well even under less-than-ideal circumstances.

If a property doesn’t align with your goals, it’s perfectly fine to move on. Staying consistent with your criteria will help you make logical, growth-focused decisions instead of emotional ones.

If you’d like help running numbers or want to see how these tools work, feel free to reach out!