Apr 10, 2017
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How to Analyze a Multi-Family Rental Property | Deal of the Day | Lewiston, Maine

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(Video Transcript)
Hey, Everyone, I'm Dave Meyer with BiggerPockets.com and today we are analyzing a 4 unit multi-family to see if it makes a good investment on this episode of Deal of the Day. Thank you, everyone for joining us. Today's Deal of the Day was submitted by BiggerPockets user Al Smith, who lives in Indianapolis, but is looking at a deal in Lewiston, Maine. Before we jump into the numbers and the specifics, how to analyze this, I'm going to talk a little bit just about the details of the house that Al gave us and some of the questions he asked us specifically to address. So, the house was built in 1881, definitely a house on the older side. It was converted into a fourplex at some point after its original construction, so we know it wasn't designed this way, but that's not necessarily a bad thing. It's listed at $110,000 and has an estimated monthly rental income of $2,250 per month. Taxes are only $2300/year for 2017. So, I'm already liking the numbers on this deal before we really get into any of the details The location is in an older part of town which isn't really a bad thing, but something to think about.

And as for Al, our BiggerPockets member, he's a first time investor. He has $40,000 saved up, so great job Al, but he prefers not to put that $40,000 all towards the down payment and is looking to use a conventional 30 year loan with 20% down… which definitely would be possible with these numbers… (Volume Up)

 

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On this week’s episode of Deal of the Day, we are analyzing a fourplex in Lewiston, Maine.

Using the BiggerPockets Rental Calculator we will be able to see if this property will cash flow and ultimately make a good deal for BP member, Al Smith!

Join us and learn how to analyze potential investment properties.

http://www.biggerpockets.com/calc
Use Discount Code: “Analyze” for 20% off lifetime PRO membership
http://www.biggerpockets.com/pro

Do you want us to analyze a deal for you? Go here to submit –
https://www.biggerpockets.com/forums/88/topics/425427-deal-of-the-day—requests-form?page=1#p2663684

Article Categories:
Real Estate · Investing · Videos

Comments to How to Analyze a Multi-Family Rental Property | Deal of the Day | Lewiston, Maine

  • Decent cashflow considering the low amount of downpayment required. Just be very careful with capital expenditure because it looks like an older building that may come up with "surprises" down the road.

    mvpwade April 10, 2017 10:58 pm Reply
    • Exactly. Dave used the 50% rule which worked out well and would cover majority of capex! Thanks for the feedback!

      BiggerPockets April 11, 2017 2:29 pm Reply
  • u

    Bashar Yassin April 11, 2017 2:53 am Reply
  • Lewiston Maine is a DUMP. Tons of drugs, massive decline in the local industry. You will for sure have to deal with some big time losers not paying rent. Be prepared.

    Shanghai Bnb April 11, 2017 10:30 am Reply
    • Good to know! Hopefully Al will be prepared lol!

      BiggerPockets April 11, 2017 2:30 pm Reply
    • Yah seriously! The only thing the city has going for it is Bates.

      Shanghai Bnb April 11, 2017 2:41 pm Reply
    • Great insight. Thanks!

      BiggerPockets April 11, 2017 4:02 pm Reply
  • Thank you for the great casestudy

    deckerjake438 April 11, 2017 2:18 pm Reply
    • Every Monday we will release a new Deal of the Day!

      BiggerPockets April 11, 2017 2:28 pm Reply
  • Why include expenses that are paid by tenants?

    Stoyan Georgiev April 11, 2017 5:59 pm Reply
    • If you include expenses in the fixed landlord expenses and you're still cash flowing it's safe to say you'll be good! It's just a way to be conservative with the numbers.

      BiggerPockets April 11, 2017 8:02 pm Reply
  • I understand you are selling your calculator, which i happen to think is good, but you are doing the investor an injustice by not allowing for repairs right away. just by looking at the video i can tell you that the railings on the exterior of the house do not meet building codes. that would be the first thing i wood fix for liability reasons and an allowance should be made for repairs right away. I recommend that people do their due diligence and allow for repairs, otherwise you may not make the money you think you will. the major thing when you own rental property is to make sure the place is up to code.

    goofybuilder April 11, 2017 9:47 pm Reply
    • Very true and great points. The calculators are a fantastic tool to help investors analyze deals. However, it is the investor's responsibility to do their full due diligence and research. The calculators are only a tool to make their calculations easier 🙂

      BiggerPockets April 11, 2017 10:07 pm Reply
  • this is a perfect example. it helps me to analyze a similar deal. Thanks

    naya50 April 11, 2017 11:44 pm Reply
  • LOCATION is EVERYTHING in REAL ESTATE!  I inherited 47 rental units from a deceased great uncle in Lewiston in the early 2000's and it was nothing but trouble.  This old river town once had booming Lumber mills but now sadly has next to nothing going for it which sadly makes it a town where people have nothing to lose….but INVESTORS have tons to lose.  I was ripped off by property managers, tenants trashed apartments, never ending repairs, constant legal battles in court and it took me 13 years to sell off all my units just to get some money out. 13 YEARS!  There is far more to a good deal than the numbers alone.  Never forget location, location, location.  A great deal in a terrible area isn't a great deal as I learned the hard way.

    joe lowery April 12, 2017 6:28 pm Reply
    • Great point, the exit is more important than the buy.

      Ethan April 13, 2017 5:49 am Reply
    • Sounds like a nice problem to have (inheritance) I actually know exactly what and where you are talking about. I bought a duplex and a house together in Orofino ID for $55,000. There is a a lot of unemployment and drugs and drunks. Seems many work seasonally in lumber and unemployed seasonally.

      FlipAnythingUSA April 26, 2017 12:29 am Reply
  • Two things. Maine banks consider four units commercial properties and you didn't include heating expenses which would run about 600 a month in a four unit in Maine.

    Tyler Tracey April 13, 2017 12:56 am Reply
    • That's really good to know!We try our best to get accurate numbers, but we can't analyze every single market to determine the exact numbers for expenses. This is why we ask our users who submit a deal to give as much information as possible.

      BiggerPockets May 23, 2017 3:38 pm Reply
  • Tried to use the code multiple times within 72 hours of this video and it is not active? What gives?

    Joseph Williams April 14, 2017 1:20 pm Reply
    • Hey, Joseph! Thank you for reaching out to us on Facebook! We will make sure to update the code for both uppercase and lowercase

      BiggerPockets April 14, 2017 2:27 pm Reply
  • Video, thanks! I wonder if BP would ever consider doing a series where a local investor will analyze a deal in their state(s)? I would love to learn more about my local deals to analyze as each state can be very different in taxes, rents, utilities, etc.

    Lindsay Ashton April 14, 2017 3:04 pm Reply
    • Absolutely! We hope to reach this point soon! Thanks for the awesome suggestion 🙂

      BiggerPockets April 14, 2017 3:12 pm Reply
  • Why Its not calculating my assessment? I purchased the plus.

    17th Luv April 18, 2017 1:16 pm Reply
    • Hey, please email support@biggerpockets.com – They will assist you further!

      BiggerPockets April 18, 2017 4:29 pm Reply
    • ok, thanks. I'll reply whether its been resolved or not

      17th Luv April 18, 2017 5:50 pm Reply
  • Fuck real estate investing

    Far Right April 27, 2017 11:47 pm Reply
  • It would be cool if there were several practice cases where we could try it out ourselves then verify with the example with answers.

    WorldWideLingo April 30, 2017 2:15 pm Reply
    • Great feedback! We will pass it on to the team and see if we can add something like this!

      BiggerPockets May 23, 2017 3:36 pm Reply
  • Can't wait to start investing!

    John Garcia May 7, 2017 10:28 pm Reply
  • Al asked about estimating expenses. When you finally get to that part, you just said you did some research. The answer is to ask the seller for their records, PandL, utility bills, and hopefuly their schedule E.

    rulestein May 22, 2017 1:45 pm Reply

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