Biting off more than I can chew

[Tom Carroll]

I've been looking at small multifamily  (3-4 units) online for a while now with the intention of house hacking,  I've read as much of the free educational materials I can.  I've even ran the numbers on some deals and looked at actual sale prices and have been pretty accurate on fair market value.  Decided to get off the sidelines and started working with a realtor,  first set of showings was this morning.

4 of the 8 places we looked at are owned by the same individual who is retiring out of state and wants to divest himself of his real estate holdings.  Property A (130k), B (175 k), and C (130k) are reasonably priced, 8% cap rate.  Property D (175k) is overpriced (by about 30%) and will need a roof/chimney in the not too distant future  Property A has a significant sag in the middle of the house that has been there for a long time.  Other than that they're in good condition with longish term tenants (2.5 year avg).  I haven't gotten the financials yet but the seller's agent said they look good.

Because of the sag I don't really want property A.  Properties B and C are next door, a 6 plex and a 4plex.  B is the better deal, butI thought about trying to snag a deal by buying both as I would need commercial financing anyway if I went for B.  

Then for giggles I ran the numbers on buying B, C, and D.  At list price the numbers worked, barely but they worked.  Running the numbers at what I think fair market for D is the numbers look good. 1.3 dsc, 6% cash on cash overestimating expenses .  I can come up with the 20% down but it would leave me with a VERY small emergency fund.

Is buying 16 units and maxing out my cash on hand the dumbest thing I could be doing as a new investor?

 How much do you think I can reasonably ask the seller to come down from list by buying multiple properties? 

[Rafael Norat]

Tom CARROLL

Hey tom. Sounds like you're twisting and turning to meet the number you want. Let your criteria dictate your offer. Don't deviate just to get the ball rolling. You definitely need some learning funds as you start. I know. So stick with your plan. If you can grab the whole lot or break them up at your number then great. Otherwise keep digging!