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Updated about 8 years ago,
Understanding valuations of small multi-family - San Antonio, TX
OK Bigger Pockets,
First real post so here it goes...
I'm a rookie. Completely new to real estate investing but I've spent the last couple of months listening to BP podcasts, attended some webinars, and getting in some reading when I can to help educate myself. I'm still trying to determine my investing niche, however I'm extremely interested in small multi-family deals because I feel they're somewhat less risky than single family and have potential for better cash flow (if I'm wrong, someone please speak up).
So far I've been using open source websites to get to know this niche in San Antonio, TX (Realtor.com, Redfin, Loopnet, etc). I realize that what I'm finding on these sites are not going to be the better deals that are out there, but my real question is that when I look up previously sold prices on some of these properties, I'm finding that most of these properties sold back when the market was beginning to come back (2010-2012), however they're selling for 75%-100% more today than when they were sold 5 years ago.
I understand forced and natural appreciation, but honestly some of these properties still look like dumps. Many others I look at I feel are overvalued from what they list the rent rolls at. When I go to check rents, it seems that many of these properties aren't even pulling in the average rent for that zip code. Is this the trend now? To list markets for what their potential for rents can be? I'm no expert but this doesn't make sense. Again, I am new to this so there is a good chance I'm not even digesting all of the information correctly. How does a guy like me look at a deal and know how much I can rent it for when analyzing a deal.
Until then, I'm going to keep drinking from the BP firehose and try to understand everything as best as I can. If anyone out there in San Antonio is already a genius when it comes to the small multis, please let me know who you are, I would love to pick your brain about this stuff.