#236: Do "Cheaper" Properties Actually Offer More Cashflow? Why Premium Assets Actually Generate Higher CoC Returns

Are you making this critical mistake in your underwriting process? Discover why your assumptions need to change when underwriting lower class rentals versus higher class properties in this eye-opening episode of the Multifamily Wealth Podcast.

In this episode, we delve into the significant differences in underwriting lower class (C-class) rentals compared to higher class (A-class) properties. We explore common mistakes investors make in underwriting, such as using the same vacancy rates and maintenance expenses for all properties.

By using the example of buying a cheap house versus an expensive house, we illustrate how adjusting your underwriting assumptions based on the property class can lead to more accurate financial projections and better investment decisions. Tune in to learn why a one-size-fits-all approach to underwriting doesn't work and how to optimize your analysis for different types of multifamily assets.

Key points covered in this episode:

 - The importance of adjusting underwriting assumptions for different property classes
 - Why is the use of percentage of gross income for repairs and maintenance not the right approach?
 - The impact of tenant class on repairs and maintenance expenses in real estate investments
 - How does the quality of the property affect repair and maintenance costs, regardless of rent prices?
 - The potential for higher cash on cash returns in slightly more premium properties due to incorrect expense assumptions

Struggling to find good multifamily deals? Looking to close deals with less of your own money? Want to operate like the pros and maximize the cash flow of your assets? Join The Multifamily Wealth Community, where we help multifamily investors start, build, and scale their businesses… specifically, those looking to grow from 1-10 units to 250+ units.

Are you looking to invest in real estate, but don't want to deal with the hassle of finding great deals, signing on debt, and managing tenants? Aligned Real Estate Partners provides investment opportunities to passive investors looking for the returns, stability, and tax benefits multifamily real estate offers, but without the work - join our investor club to be notified of future investment opportunities.

Connect with Axel:
Follow him on Instagram
Connect with him on LinkedIn
Subscribe to our YouTube channel
Learn more about Aligned Real Estate Partners