1st Multi-Family Deal- AM I CRAZY???

[David Spear]

I've had good success following the 1% rule on my sfh properties and am seeing good $$ flow (8-10% 1st year coc return on a 15 yr note) but I have not done a very good job analyzing properly my first commercial property.

Price is 480k and these numbers are accurate with full occupancy. The only variable in this is that the gross rents could probably come up to about $4200. This commercial property does not currently meet 50% rule. I made the mistake of running the initial numbers based off of downpayment of 57% from a 1031 exchange in which case it cash flows $735/month at full occupancy but even in this scenario 1st year coc return is 3.14% Clearly,  I do not want to overpay for this property and give up my hard won 1031 equity. What do you think its worth based off these numbers? Thanks!

[David Spear]

Update-Passed on the 6 plex and very happy that I did. I learned a lot along the way especially when it comes to commercial lenders. I ended up purchasing a duplex in cash with my 1031 equity and 2 SFR, with conventional loans. Combined, I'm seeing about $2k a month in pure cash flow.