My first deal/Is this worth it?

Question

Hi Friends,

I am about to purchase my first multifamily property. It's a two unit. I have crunched the numbers and I stand to net $458 per month. Is this worth it?

Account Closed · Answer

Anything is better than losing money haha. Do you have any more information on the deal?

Juaneka Brim · Answer

I used the 4 square formula to calculate cash flow. I used the number provided on MLS through the realtor.

Douglas Mcqueen · Answer

@Juaneka Brim Will need t provide more detail to know if the property is worth it.  If you are asking is $458 monthly cash flow good then sure, anything positive is "good", $229 cash flow per unit per moth isnt spectacular though but really it all depends on the deal and how much you are spending to get that return.

This is your first property so you need to be absolutely sure you have taken into account all the numbers involved , especially with that small a margin.  When you "crunched the numbers"  who's numbers did you use, and where did you get them?

If you provide more information and more specifically the numbers involved in the deal you will get a more educated response and much better feedback.

Lillie MAnon · Answer

@Juaneka Brim, Post some more details...

Cashflow above $200 per unit after all expenses is considered decent, obviously the more the better.

Make sure you review ALL of the expenses. Utilities, snow and landscaping if applicable. Water, etc.

will you self manage? If you plan to self manage, is there room in the income to pay a management company if you decided to get one eventually? As you scale, self management may challenging or more of a headache than it’s worth. You want to make sure you can still cashflow.

Will the utilities be tenant or landlord paid? If landlord paid, ask to see copies of recent bills.

What’s the condition of the units?

If it’s turnkey, is it truly “worry-free” turnkey meaning that it was gut renovated with everything all new or is it just in decent enough condition to continue to rent it out without immediately doing work?

If you plan to renovate it, have you gotten written estimates on the cost and do your numbers still make sense?

What’s the rent in comparison to market rent? Is there room to increase the rents?

Juaneka Brim · Answer

Yes, what would you like to know?