I currently live in PA. I live in a 3 unit buliding now and want to buy more mulit family properties. The multi family properties in my area are going for 129,000. NOI is 11,719 these properts dont include Maint. Repair and management or vacancy. I am looking for cash flow properties and at the moment when I do my rent roll or property analysis most of the properties are in the red. Can someone please tell me what i am doing wrong. Or give me some advise.
There’s a high likelihood that you’re not doing anything “wrong”. In some places, it is hard to cashflow…
What is the average rent that you can charge for one of the apartments?
There are just a few ways of adjusting to cashflow:
(1) Put more money down
(2) Get a lower interest rate loan
(3) Cut expenses
(4) Raise income (rents)
Keith
The “secret” to getting properties to cash flow is to buy them CHEAP! The vast majority of multi-family properties are sold at retail and will not cash flow.
NOI is defined as the Gross Rents minus Operating Expenses. Therefore, a NOI of $11,719 that does not include repair, management, vacancy, etc, etc, etc, is not NOI at all. Expenses also include advertising, evictions, legal fees, court costs, entity maintenance, fuel for your vehicle, exterminations, damage done by tenants, office supplies, etc, etc, etc.
The key to buying properties at a deep discount is to meet people. Join your local REIA. Look for disgruntled landlords. Keep a lookout for people who MUST sell now.
Good Luck,
Mike
bc,
i know how you feel. when i was on the big kick to buy rentals - i kept finding “stinkers” as i call them - noncashflowing or in need of WAY TOO MUCH repair to consider or offered by some schlub trying to “pull a fast one”.
i live in a market that does not lend itself well to residential rentals - and everything that is for sale, be it a multi unit, SFH or even commercial real estate - the sale prices are TOTALLY OUT OF CONTROL.
“flippers” are getting CRUSHED in my local market right now.
it’s all about how you can adapt to the market or move to a better market place, if real estate investing is going to be your sole method for financial success/business.
you’ve got to buy cheap.
you’ve got to look for ways to increase rents, buy from “motivated sellers” - hence buying “cheap”, and/or utilize some creative financing combinations, advertise, network, among other things.
Thanks everyone for all your suggestions and help.
Well can you give an good example of a multi family property that will produce a great cashflow. So that we can see the numbers and how to work them