All Forum Posts by: Robert Rixer

No excuse for poor management from an experienced sponsor. Lower than 90% occupancy in multifamily means asking rent is too high or units are offline (management issue).

Crunching rough numbers you need a significant percentage of depreciation in that first year to offset not only your tax liability but also the income of the property. Look into Cost Segregation and talk to a professional. It allows you to front-load depreciation way faster than the standard 39 year straight line.

Agree with the concept of spending more time searching for deals rather than money. Too many investors these days spend 80% of their time sourcing LP's and little in the way of finding actual value. With that said, you have to have at least some track record to lean upon. Best bet starting out is to partner with a GP who can bring some experience/track record to the table.

Vacancy in multifamily is more a function of price. If you priced the units at $1/month you would be at 100% occupancy in no time. As the price rises to equilibrium, that's when occupancy could start to dwindle. Most vacancy issues in stabilized multifamily is due to a stubborn owner holding out at too high of price.

Vacancy is much more of a factor in retail and office where tenants aren't so easily or quickly replaceable.

Just remember when renting, the rent price is the maximum you will pay each month. When owning, the monthly payment will be the minimum you will pay each month. Maintenance and large capex items can often get overlooked when investors focus on monthly payment.

From my experience, since tenants typically pay electric, they would directly pay for powering the window units versus a central unit which the landlord would pay for. The market could build this in to pricing but I honestly don't see much data to clearly support that. Another consideration is if all the current window units are the same age or if they are a mix of new and old.

A 50-unit multifamily vs. 1 SFH is not an equivalent comparison. The equivalent would be a 50-unit multifamily vs. a 50 SFHs. If a furnace goes out on 1 SFH, you still have cashflow from 49 others.

Cold calling owners. Ask them if they're open to selling. If not, hang up and move on to the next one.

Cost to build today would be prohibitively expensive for the return, especially for a non-experienced developer. As for house-hacking an existing quad, only putting 5% down in this high interest rate environment will almost certainly mean you won't be "living for free" as is the point of house hacking. With that said, if you take either route, manage it responsible and hold it for the long term term, you will almost certainly come out a winner in the end.

The correct valuation is what the market is willing to pay for it.

You didn't provide any information on what cap rate you applied to your calculation or how you derived your NOI, all of which could play significant factors in the discrepancy.