Multi-Family Cash Flow Seeking Advice

[Matthew Haase]

I am currently looking at a 4 unit MultiFamily that will be upwards of 900K. How much cash flow should i reasonably want (after accounting for vacancy, repairs, capex) that makes a deal like this worth it? I see Brandon in the BP vids looking for 100/unit and think that is good for his area but would be fairly low for a mortgage this high. I am using a VA loan so I will have no money down into the property so my cash on cash ROI is odd to conceptualize for me in a way that makes sense. Any advice from some of you more seasoned investors would be greatly appreciated! Thanks!

[Ryan Ingram]

Here is how I would quickly analyze it:

I would check rentometer.com and get an idea of the expected rent. Using easy numbers, let’s say the rent is $500 per unit or $2,000 monthly, $24,000 annually. Using the 50% rule, after expenses you can expect to have 12,000 of net operating income.

Ask a realtor about local cap rates and divide that from your NOI. So, if cap rates in your area are 10%, 12,000/.1 is 120,000. I would pay no more than 120,000 for the property.

That’s my shorthand way to analyze, hope that helps. If not, thanks for letting me talk!