so i finally closed on my first multi family unit!!
3-family owner occupied purchase price 220k, appraised for 310k. rents 2700$ (from 2 units) mortgage ~2400$. i live for free and i make 300$/mnth extra. i came out of pocket for 2 things so far which have totaled less than 500$ and it’s been 6 mnthswhen i move out i could rent my unit for 1500$month. thats an 1800$/mnth cash flowing property. it was built in 2005. aside from new paint and cleaning the carpet the house was practically in move in condition and needs no work. . So all my cashflow has been positive so far.
since i was able to do that…of course im EAGER to purchase a second one. why when i ask about going for my next one i get “purchasing a multi fam isn’t just about making sure your mortgage is covered” or “its not easy”. i get so many negative responses. When in fact it has been very good for me.
my question is
what makes a deal a good deal. is it just a matter of opinion?
as a new investor im using similar formulas and numbers to work out my next few deals…is this correct? is investing in multi-families this “easy” or am i missing something?
you bought it at about a 30% discount, needed virtually no rehab, its cash flowing (just using the basic rent from the two units toward PITI with no maintenance figured in),
your biggest problem will be finding your next deal to compare to that one
The issue people will have with a deal like this is maintenance expenses as the property ages. Overall this is not a bad deal, but it is far from a great deal
Congrats on doing your first deal. That’s truly a great first step. The nice thing I like about what you did, is that you converted your place where you live into a profitable venture. That is unusual.
Everyone has unavoidable living expenses…you need a roof over your head, clothes on your back, food on the table and a car to drive. Those are USUALLY things that cost you money, and may or may not be somewhat of a tax writeoff. But if you can live in a place AND make a profit off that place at the same time…good job man. That’s pretty cool.
Here’s one big tip I would recommend - on all future deals - try to make sure you follow the 2% formula. Make sure you get at least 2% of your total investment back per month in rent. I have even purchased some deals that yield me 3%+ back per month!
So if you bought another triplex for $220,000, make sure all 3 units will rent for $4400 per month when its fully occupied (assume you don’t live in your next investment).
If you wind up doing things like I did … my first investment was “OK”. My first deal was not spectacular, but it did make money, however each subsequent deal got better, better and better - because I became better at negotiating and finding deals.
