How to Buy Your First Small Multifamily Property This Year (2-4 Units)

0:00There is one type of real estate deal that always works. Whether the markets are up, down, sideways, or whatever you call today's market, small multi-family investments can deliver great returns for independent investors like you. And there's a reason. These properties are designed for you. No homeowner wants a for-unit, and no large wall street investors want it either. Small multi-family is the asset class made for small to medium-sized investors like all of us in the bigger pockets community. Small multi-family works so well because it offers cash flow, tax benefits, appreciation, and relatively low risk, plus you can get the benefits of residential financing. It's so good, and an asset class I think is worth exploring for almost any portfolio goal. And luckily, they're not hard to buy or to manage either. Am I overselling this right now?

1:00I actually don't think so. I just really believe hard in small multi-family. And today on the show, I'm going to show you how step-by-step to buy an excellent small multi-family deal in 2026. Hey everyone, welcome back to the Bigger Pockets Real Estate Podcast. I'm your host Dave Meyer, Chief Investment Officer at Bigger Pockets, Real Estate Investor, and Housing Market Analyst. Today, we're talking about my bread and butter, my rider die, my first deal, my most recent deal, small multi-families. When I say small multi-family, I mean two to four units specifically, your duplexes, your tripplexes, your fourplexes, these properties give you more scale than a single family rental. But the same time, they're easier to acquire and less risky than buying a big multi-family apartment, like a 20 or 50 unit apartment building. And there are some really unique benefits to buying

2:04these kinds of properties specifically when you stay under four units. For most early career investors, this is a real sweet spot. And even for experienced investors, this could be a sweet spot. It is just a versatile asset class that is perfect for people pursuing financial freedom, and I am excited to get into it all with you today. In this episode, I'll cover first and foremost why small multi-family is really my one true love. Then I'll give you a step-by-step road map for finding, analyzing, financing, and closing on small multi-family deals right here in 2026. I'll go over the common mistakes I see, a lot of newer investors who get into this make and how to avoid them. And by the end of this episode, you will have a complete road map for buying your first small multi-family property in 2026. Let's get to it. So first up, why small multi-family here in 2026? Well, I got a lot of reasons, but I'm just going to start with one thing I think is

3:09often overlooked. And it's that this asset class, specifically two to four unit properties, are basically designed and built and made for people like us. For small to medium independent investors. Because most people who go out and buy home as a primary residence aren't looking for duplex or a four unit, they want the single family home with the yard and the pick-of-fence and all of that. Meanwhile, the huge institutional investors who want to buy apartment buildings and be in the housing market, they can't scale to the size they want to be. They can't deploy enough of their capital for units at a time. They have to go out and buy these bigger properties that are 20 or 50 or 100 or 500 units. And that leaves this really nice sweet spot for small independent investors because we're the ones who love this asset class. Well, maybe you will at the end of this episode. I already love them, but a lot of small independent investors love this asset class

4:13because you're not facing that competition from homeowners and you're not facing competition from the other side from the institutional investors. And this creates that sweet spot for people like us to operate. The second big reason I love small multi-family is it allows you to scale, but you still get residential financing. We're seeing this all over the market right now, but commercial financing. When you go out and buy anything that is five units or bigger, that is a totally different type of loan. It's still a loan, but it looks very different. It has usually adjustable rate mortgages. There's often balloon payments. There's pre-payment penalties. It is a totally different type of loan product. Now, it works if that's your game. If you really understand that and how to do that safely, that's totally fine. But generally speaking, I just think it is true that residential financing is better. If you stick to four units or fewer, you typically get better interest rates and you can still get 30 year fixed rate debt.

5:17Which not everyone uses, but is an excellent tool for real estate investors. I personally love fixed rate debt where you can lock in your interest rate for the lifetime of your loan. Meaning that if you underwrite your deal well today, you know exactly what your biggest expense is going to be forever until you pay that off. That is not how it works in commercial real estate. Your loan rate, your interest rate adjusts. And so three or five or seven years down the road, you might be in for a rude awakening like every syndicator who bought something between 2020 and 2022 are realizing right now. If you want to know why there's distress in the multi-family market, why there's all these syndicators who are struggling, it's because of that commercial debt. For the most part, I'd say like 80, 90% of it is because they have adjustable rate mortgages. If you stick to four units or fewer, you don't have that problem. You can get pretty much the same mortgage that you do if you went out and bought a single family home as an investor. So this is a

6:20huge underrated benefit of small multi-family. Get that residential financing, but scale a little bit quicker than just buying single-family homes. So that's sort of the big picture, but let me just kind of compare multi-family because a lot of people choose single-family rentals, which is great because they are relatively low risk. But in many ways, I actually think small multi-family is lower risk than single-family because you have multiple income streams. Like I have seen this in my own investing time and time again. But if you have a three or four unit and you have four different people paying you rent, that spreads your risk, your income risk, among multiple people. There's no single point of failure. So if in a single family home, you have someone who stops paying rent or there is a vacancy, that is 100% of your income. Meaning you as the owner are going to be coming out of pocket 100% for all of the expenses during that time when there's a vacancy or that person's not paying rent. But with a small multi-family, you're getting income

7:25from multiple places. So let's just assume you have a four unit with equal rent. Now if there's a vacancy, which happens or someone stops paying rent, which hopefully doesn't happen, but it does happen time to time, now you're responsible for 25% of that shortfall, not 100%. And alongside the financing stuff I just mentioned, I think that's there is an argument to make that small multi-family actually has lower risk. All right. So that is my passionate reason why I love small multi-family so much. Let's move on to talk about how you should actually go about doing this. How to buy, step by step, a great multi-family property in 2026. We've got to take a quick break, but we'll be right back. Stick with us. Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly, the cheapest policy doesn't feel like the best one anymore. That's why a lot of bigger pockets investors use steadily for landlord insurance, designed specifically for rental properties. Whether you own one property

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11:38maintenance coordination, and reporting. Whether you're managing one rental or scaling towards your tenth, mind is built to grow with you. It frees up your time to focus on finding your next deal instead of fielding maintenance calls. And it's not just about time. If you're a bigger pockets pro member, mind will save you $500 for every home you onboard up to $10,000 in your first year. Check mind.co to save time, money, and frustration. That's m-y-n-d.co. Welcome back to the Bigger Pockets podcast. I'm Dave Meyer. Today we're talking how to buy a amazing small multi-family property in 2026. Before the break, I shared with you why it's my personal favorite asset class for investing. It's the first deal I bought 16 years ago, still trying to buy them today in this market. And I'm going to share with you my step-by-step buying guide for doing that in this market. So step one, as always, when we talk about how you go

12:38about acquiring new properties, step one is always about goal setting and market research and making sure that you are identifying markets and opportunities that align with your long-term goals. So goal setting first, right? Are you looking for cash flow or appreciation? How much can you realistically put into a down payment? Do you want a house hack or invest purely as a landlord and you don't want to deal with the owner-occupied thing? There's huge benefits where do you want to do value-ad? Like make renovations or you want to buy something more turnkey. Spend a couple minutes, like 10, 15, 20 minutes, just thinking through these questions. And I honestly recommend writing them down because this is going to be really helpful when you go talk to a real estate agent about what you want to buy and developing your buy box. But think through these things. Cash flow and appreciation, I personally look for hybrid. I want at least a little bit of cash flow. I do not buy non-cash-selling properties, but I also want appreciation upside. So I'm willing to

13:40give up some cash flow for that potential. That's usually the trade-off. Sometimes you get a great deal where it has great cash flow and great appreciation. But usually there's a balancing act you need to think through. And for me, it's at least break even cash flow, ideally three, four percent cash on cash return, big appreciation upside. That's what I look for. Next, how much can you put as a down payment? If it's less than 20 or 25 percent, you're either need a partner or you need to do a house hack where you live in one of the units. Because when you do that, you can put as little as 3.5 percent down. And plus, house hacking has so many benefits. I really, really recommend if this is your first deal. If you're willing to do it, it really isn't bad. People are so dramatic. I have done it myself. It is really not that big of a sacrifice at all considering the upside. So if you're going to put less than 20 percent down, that is a good thing for you to consider, or you might need to find some partners to bring in some money. The next thing to really think through is value. Like I said, like do you want to take on a big renovation? Maybe. I mean,

14:42I think a good sweet spot is sometimes when there's one or two units that are in good shape and one is not. You can live in that one that's not and fix it up as you go and do kind of a live in flip kind of thing. Or you could rent out two of the units that are already in good shape. So you start getting some cash flow coming in to cover your expenses while you renovate that third or fourth unit so that you know, you can command the maximum rent once that renovation is complete. There are no right answers here. But generally speaking, the more work that you put in, the more upside there is. If you want to build equity, if you want to eventually refinance out of this property to use that money, recycle it into another deal like you do with the Burr strategy. Like then you might want to consider a value at what I would look for if you're asking me is a market where there is good appreciation, a little bit of cash flow. If I were starting out right now, I would do a house hack. But for me as an experienced investor, I would be putting 25 percent down so I could get a good loan. And I would look for a value at I personally like the slow Burr strategy

15:46where I can rent out the properties today. If I want to, they're not in that bad shape where it's like, oh my god, I can't put a tenant in there. But there's an opportunity for drive up the rents and drive up the value of the property by doing modest cosmetic renovations. So that's just me, but ask yourself these questions for yourself. That's step one. Step one, A. So it's they're both got a step one. Maybe this should have been a second step. But step one, A is then like figuring out if those goals that you have in the buy box that you're creating for yourself is realistic in the market you live in because you might say, I want, you know, a house hack that has cash flow and appreciation. And I can only put 10 percent down. If you live in LA, like that might not be happening or if you live in Seattle or New York or Boston like that might not be happening. So you need to understand what's realistic. The other thing about small multi-family is that although they are available in most markets, certain areas of the country just have more small multi-family.

16:48Like a market like Chicago is just ripe with small multi-family properties. Generally speaking, a lot of Midwest cities, a lot of Northeast cities have strong multi-families and the southeast have fewer. Just because there's more land, right? People tend to build single-family homes in the south instead of more dense multi-family properties. That's not true everywhere. Most cities have at least some. But if you're a new investor or wherever you are, if you're trying to scale a portfolio, we should at least understand how easy it is going to be to find this asset class. Can you get repeated deal flow in your market for this kind of deal? If not, you might have to consider investing out of state. Obviously investing out of state, you're going to give up that opportunity to do owner occupied, but that's okay. You can still find great affordable properties in the Midwest, in the Northeast, in the southeast, where you can absolutely do this. So that is sort of step one. It's like sort of get your ducks in a row, figure out what you want to buy and where you're going to buy.

17:51And spend a couple days with this. Don't spend forever and just overthink it and get analysis paralysis. But spend a day or two, talk to an agent, talk to a lender, talk to other investors in your area. Go in the bigger pockets forums and ask investors if there are good small multi-family deals in the area that you are considering. It's free. Go do that. Once you've got your answer to that, though, you can move on to step two, which is financing. And again, this is where I think small multi-family really shines. It's because you can get conventional loans. You can get Fannie and Freddie conventional loans, which are easier to get and have generally speaking great terms. As a reminder, as what I said earlier, but when you stick to four units or fewer, it is consider residential financing. You don't cross that threshold into commercial real estate. And by staying in that residential financing, that is where the magic happens and you get these fixed rate loans. Now, if you are going to buy a traditional rental property and you're not

18:54going to owner occupy it and liven it, usually you have to put 25% down. Like when I underwrite deals, I expect to put 25% down for investment properties on a conventional loan. You can also use things like DSCR loans. If you don't have a traditional W2 job or your credit's not the best, this is a type of loan where it's underwritten like commercial real estate, but you get a lot of the terms of residential real estate. You can still get fixed rate debt. And this is super appealing if you work as a contractor. You work for tips or you just don't have a regular income and you can't qualify for that conventional loan. You could still get really good financing options for small multi-family through DSCR loans. And if you're a bigger pockets pro member, we actually have discounts on DSCR loans. You can actually get like 25 basis points off your interest rate. If you're a bigger pockets pro through key RV, you can go to bigger pockets.com slash pro to check that out. If you are a pro member, that alone pays for the pro membership. So check that out.

19:58On top of those two options, you can always look for seller financing. That is very popular right now and you might be able to find someone willing to do that. I'm a big fan of seller financing. If you can find it. And then the last thing is if you want to buy properties and you don't have enough capital, the other option is to partner with someone else to partner with someone either friends or family or another investor who has some capital and is willing to go in on it and is as excited as you are about the opportunity with small multi-family. And that's kind of your job. Go out there and get them excited. Get them as excited as I am about small multi-family properties. And that's another great way to finance. So those are really the first two steps. Again, step one is kind of figure out your goals and your market and making sure those are all aligned. Step two is figuring out your financing. And now we can move on to step three, which is what I think. The fun part, you got look for real estate and you do your analysis. And this is where you really decide what you're going to buy and what is really good. And it's also where some investors go wrong. They

21:02sort of fall in love with a property or an idea or a street before running the numbers. But I want you to follow this systematic approach to actually running the numbers and doing your underwriting the correct way so that you protect yourself against downside risk and get to enjoy all the potential upside of a small multi-family deal. So the first thing you need to do is find properties to analyze. You need to figure out your deal flow. And that can come from a couple of different places. Number one is on market deals. So you can do this by either looking at zero or realtor or whatever yourself. Go out, set your buy box and wait for deals to come in and analyze them. So that's option number one. There's going to be a lot of properties to look at with this option. But a lot of them are going to be bad. That's just kind of a trade-off with the MLS. You're going to have to sift through a lot of different deals, which I will show you in a minute isn't really that hard, but that is sort of the trade-off. The second is by working with your real estate agent, which you know, if you're working with an investor-friendly agent, they'll obviously help you sort through some of those deals

22:04and some of those properties on the MLS. But a good investor-friendly agent probably also has some proprietary deal flow. Either they are doing direct to seller marketing themselves or they're getting off market deals or they work with other agents who are doing that or they have relationships with investors or home sellers who don't want a list and just want to do a pocket listing. That honestly is a way I find a lot of my deals. I think this is a great way to do it and underscores the importance of working with a great agent because if you find the agents who are really well-connected in your city, it's kind of where the best deals come from in my opinion. Without having to do direct to seller marketing and doing like the whole marketing thing, which I'll talk about in a second. So make sure you're working with the right kind of agent here. If you want to get matched with one, we do it for free at bigger pockets, bigger pockets.com slash agent. The third option, like I said, is just doing that direct to seller marketing yourself, basically trying to source your own off-market deals. Now you can do it. It works really well, but you have to put a lot of time and money into it.

23:06Like Henry does this. I don't just for the record, but Henry does this and you know, I don't think it's breaking the bank, but he's spending, I would imagine, thousands of dollars every month, sending out mailers, building lists, sending postcards, sending automated SMS, and that is a real long game. For the people at the right personality and the drive to do this, it's a fantastic way to get good deals. Once you have deal flow, that's when the analysis part comes in. And this is where you really got to be disciplined because you can sort of scatter shot the deal flow piece, and find deals, have recommendations come in from all over the place, but you need to have your own process for running the numbers on a deal that you trust and you know we're going to give you the right numbers. And that is why I personally recommend using a tool like the bigger pockets calculator instead of building your own expel spreadsheets. Using a proven tool is going to tell you all the key metrics you need to know and it makes it easy to do it quickly. Recommend checking out tools

24:08like the bigger pockets calculator, you can go to bigger pockets.com slash calculator and check those out. But word of caution, I've tried using chat GPT and other AI tools. They get some of it right and they get some of it wrong. So if you're going to use those, just please double check the numbers and like actually know the math, don't just assume that those are 100% correct. Once you picked your tool, what you need to do is just go in and put in your assumptions. So this is what you're going to buy it for what your financing terms are. And now that you've found financing, you should have a good idea of that. You should underwrite your deal to not just at list price, but for what you expect to offer on this property. So what I recommend is running the analysis first at list price. So if someone lists for 300 and you're like, that kind of seems over price, still run it at 300,000 the first time. Put that into the calculator, put your financing assumptions in, put your rent assumptions. If you're going to do a value ad, estimate what those expenses are going to be. It's a whole other show, but basically go talk to other investors, talk to your agent,

25:12talk to contractors and get a ballpark estimate of what it's going to cost to renovate the property. And what the ARV is, ARV just stands for after repair value. What is the property worth after you fix it up? That's the ARV. Okay, so you figure all those things out and you put them into your calculator. And I've done plenty of other videos on like how to estimate these things. So if you want more help on that, you can check out our YouTube channel. We have tons of free resources on that. But put those into the market and see if it gets what you identified in step one as your goal. Does it offer the cash flow you are expecting? Does it offer the kinds of appreciation that you're expecting? And if the answer is yes, awesome. Double check it and then go right on that property. Like, right, like, don't overthink it. If it hits what you wanted, you don't need to overthink things. Like go out, make sure you're getting it at the right price, make sure that you're maximizing and optimizing for price and negotiations in today's market. But go do that. If the answer is no, and I will just say, be prepared that the answer is usually going to be no almost all of

26:16the time you run a deal, you're going to say that doesn't work. That is good. That is what you want. If you are running deals in today's market on small multi families and all of them are coming up great, most likely your criteria are strict enough. You're expecting too little cash flow or some of your assumptions and your analysis are wrong. Because if every deal was just a win, like people would be buying like crazy. We would see higher transaction volume in the housing market. That is just not the world that we live in right now. But don't be discouraged because number one, like I said, that is a good thing that shows you are being discerning and you are good at analyzing your deals. The second thing to do in today's market is think about the question, how would this deal work? Because you're just putting in what they're asking for and you don't have to offer what they're asking for. So ask yourself, would it work instead of at 300,000 at 280? Maybe it needs to be 260. Maybe it needs to be 250. Now I went off for 250 on a 300,000 property that just went on the market

27:21yesterday. But it's sitting on the market for 30 or 60 days. I would offer that. So go back through the calculator and figure out what levers you need to pull to make this deal work. And sale price is only one of them. A lot of times right now, I actually did a whole episode of the on the market podcast or sister podcast about this the other day that sellers right now are more likely to give you a concession during closing than lower the price. So if you go back and say, instead of 300, I want to do 280 and they say, no, okay, I'll pay 300. But you have to buy down my interest rate, two percentage points and you have to cover my closing costs. It's funny because it actually works out to the same number for the seller and for you. But sometimes that just works. And actually there is data and evidence that shows that sellers are more willing to give concessions than they are to lower the price. So think through that during your analysis. What would it take to make this work and go off for that? Don't be ashamed of it. Don't be embarrassed of it. Low ball, right?

28:23It's not offensive to the seller to go and say, I'm a business person. This is what works for my business. Does it work for you? If they say no, so be it. Move on. If they say yes, fantastic. You have found mutually beneficial situation, which is the whole point of this thing. The metrics, I think you should be looking at if you're new to this is cash on cash return. And again, this is a spectrum. If you're in a good area that is likely to appreciate that's going to have low vacancy, that's going to be easy to maintain or you're going to have great tenants. I go as low as 3, 4% on a cash on cash return. They're going to do a value add after the renovation. I want that to be higher like seven or eight percent. But if it's going to turn key property in a great area, I want three to four percent. If I'm on the opposite end of the spectrum where it's kind of more of a casual play and there's going to be less appreciation. There's going to be more maintenance. I need that cash on cash return higher, probably eight to 12%. So that's really up to you and your goals. But those are some just basic benchmarks for you. And then in terms of total return,

29:25this is something I try and stress a lot because in a lot of other real estate personalities and educators don't talk about this. But I like to add up my total return, my cash flow, my appreciation, my amortization, my tax benefits, and my value add. And I want that to be a minimum of 12% a year. I have a calculator on bigger pockets resources bigger pockets.com slash resources. It's free. You can go check it out. It's called the TRI, the tri calculator. It's since for total return calculator. And I recommend using this because that's my ultimate metric here because personally, in my investing, I don't really care as much. If I'm getting a 5% cash on cash return versus a 3% or a 7%, it's the whole package. I want to make sure my whole return is really good 12 to 15% a year. Ideally higher, like 15 to 20% is really good, but a minimum of 12%. So go check that out if you want to do that as well. Now one note here is that if you're doing a house hack on a small multi-family, the analysis is a little bit different and you don't need to cash flow. That is really,

30:29really important. And a mistake I think a lot of people see is don't measure your cash on cash return for a house hack. Measure your personal cash flow. Like not what the deal is doing, but how much are you paying for a house? Because if you're renting right now and paying 1500 bucks or whatever, and then you house hack and you're now still coming out of pocket, but only 400 bucks, that's $1100 in cash flow. Think about that. Like that is you saving $1100 per month, right? That's over $10,000 a year that you are saving. That is the equivalent of cash flow. So don't get hung up on a cash on cash return if you are doing a house hack focus more on the overall benefit to your financial situation and your inflows and outflows of capital every month. One last thing before we move on to step four is just a couple of red flags to look for. Unless you're really good at this and know a lot about construction, I avoid properties that need like major, major repairs. Like I'm fine with a roof. Roots really like they're expensive, but as long

31:31as you underwrite for them, they're actually easy to repair. There's tons of roofers. It's like not complicated, but like a situation where you have to replum the house where you need new electric, where you have foundation issues, water issues, stick to what you know, stick to what you can realistically handle, especially when your first getting started out. Another red flag, buying the cheapest property just because it's cheap, please don't do that. It never works out for people. Third, areas with declining population or job loss. Like there's a market that is declining. Some people are like, oh, buy the dip. They don't always come back. It's not the stock market. There were markets that crashed in 2007, 2008 that took more than 10 years to recover. You don't want to be in that situation. So make sure you're really understanding the fundamentals of your markets as you're doing these analysis because a deal can look good, but if the broader market is not great, that's a red flag and you need to look at both of those. All right, so that's it. That's step three. We've talked about doing your goals and finding your market, financing and

32:33getting your deal flow and analysis. Next up is due diligence. So once you've made that offer and got it inspected, how do you make sure this deal is really the one worth pulling the trigger on? We're going to get to that, but we have to take one more quick break. We'll be right back. I just booked a trip to the coast and I cannot stop thinking about it. Waking up early, walking somewhere I've never been, finding a little cafe with no plan except to see what the day brings. A few days to explore, trying new restaurants, smell the salt and citrus in the air and remember why we left to travel in the first place. That feeling of being somewhere completely new, that's what keeps me chasing the next trip. But here's what makes it even better. While I'm away, my place doesn't have to just sit there. I can list my space on Airbnb and bring in a little extra cash while I'm off exploring. And with the Co-host network, I don't have to think twice about it. A Co-host is a vetted local expert who can handle everything from creating your listing to managing reservations, managing guests, and even styling the space. So I get to fully be in the moment on

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36:46Quick note before we dive back in. This episode is brought to you by Kashaap. I've been using Kashaap for years to send and receive money. Sometimes I need to pay someone who doesn't take credit cards or if I want to split a check or just to pay back a friend for a shared cost. Kashaap also helps me online shop safely. More investors are thinking about where Bitcoin fits into a broader portfolio. Not as a short-term trade but as long-term exposure to an asset that behaves differently from traditional markets. Kashaap makes that kind of Bitcoin strategy more straightforward. You can buy Bitcoin directly in the app, set up recurring purchases or make larger buys when it makes sense for you. And with zero fees and zero spread on automatic purchases like auto-invest, roundups and paid in Bitcoin, more of your money goes toward Bitcoin. Download Kashaap today. Visit our link in bio, Bitcoin Services by Block Inc. See the Bitcoin Disclosures at Kashaap slash legal slash podcast. Welcome back to the bigger pockets podcast. I'm Dave Meyer.

37:52Going through our step-by-step guide to buying small multi-family here in 2026. We've talked about identifying goals, about financing, about deal flow and analysis. But we actually haven't talked about the full analysis. There is a step that you need to do, pass this, that a lot of people skip, which is what you might call due diligence. It's basically once you have run the basic numbers, maybe you've even agreed on a price, like how do you really make sure from the time you put under contract a closing date that this is a good property? You need to go through due diligence in your inspections and make sure this property is exactly what you're expecting. And that your underwriting your deal analysis is accurate. So do your financial analysis with a small multi-family, something you should always look for is rent rolls for the past, people say 12 months, I want them for three years. I want to see what rents have been. Number one, are they going up? Are they going down? Have there been vacancies? If the seller cannot provide these, that is okay, that honestly

38:57happens a lot. But it's something you need to consider. You need to then go out and double check and really, really make sure that you can get the rents that they are saying. Because maybe they've gotten rents up really high, but people keep leaving every three months, or people aren't paying, right? Like that's what they're supposed to pay, but they're not. So if they don't have real financials, really, really make sure to double check your rents. And the way to do that is you can go on Zillow, but talk to a property manager. Talk to another investor and make sure they're realistic. Same thing goes with expenses. You should be able to see what expenses the seller has had. Not all of them are going to have it again, but you really want to go line by line, insurance, taxes, check the maintenance reports, right? See when the last time that boiler was serviced, or is it going to explode the day after you buy this property? It sounds tedious, but it's really not that hard. Your agent should help you do this. The inspector will probably give you some

39:59areas that you need to pay attention to. You don't need to check under every floor board and every wall, right? They're going to point out some things. But remember that inspections are not flawless. It's a painful lesson. I learned early in my investing career. Like, oh, there isn't inspection. Everything's fine. No, inspectors only look at the stuff they can see with their eyes. They don't actually go into the walls. They often just do like a basic peak into the attic. So make sure you are doing your due diligence and fully understand exactly what is going on in this property. And if you don't like it, go back and negotiate, do an inspection objection. That is the power of being in a buyer's market like we're in right now is that you can go back and ask for repairs. Do it. This is one of the big differences between 2022 and now that really favors buyers. Is that back then if you asked a seller for a concession after an inspection, they would tell you to go pound sand. But now they will come back to you and pay for it. At least a certain amount. Just telling

41:01you this from experience. I've sold a couple properties of the last year and I just caved, right? Because it's hard to sell a property right now. And so when asked me for five grand after the inspection report, I'm probably just going to give it to him rather than go and list the property again. And I think a lot of sellers are in that mindset. So use that to your advantage if you want to go buy a small multi-family this year. And at the end of the day, even if they give you some, make sure you are comfortable with the numbers before you go. Because there's always another deal. Be willing to walk away if it doesn't work. But with good negotiation right now, if you got it under contract already, I'm guessing you can probably make this work. A couple of things you should pay attention to before actually closing. Just look at the leases, stuff like that. Make sure that you understand all of the compliance issues like some markets have rental licenses that you need to apply for now. Just check that kind of stuff. And again, your agent should be helpful with you on these. But just make sure you dot all your eyes, cross all your teeth and that everything is what you expect. And

42:04that your underwriting and your calculator report is up to date. So as you make these changes, if you negotiate a change or you realize actually rent's going to be a little lower or maybe it's going to be higher. Hopefully go change that in your calculator report. They're editable bigger pockets. So just go do that and make sure that the numbers are still accurate. Every time you get more information, more data, put it into the calculator and keep updating your understanding of how this deal might perform. Once you've done that, it's time to actually close. Go out and write your name a thousand times on a piece of paper. That's basically all it is. But I just wanted to call out a couple of things to pay attention to when you're closing. First and foremost, just concentrate on the days up to the closing on transition. You need to transition from the existing owner or property management system to the one that you're going to use. So if you're self-managing, great. This should be relatively simple. But little things figure out like when are you getting the keys? Make sure that they're bringing them to the closing or you've arranged for

43:06them to be delivered to you or somehow. Like usually that's easy to usually bring them to closing. Make sure you understand and have contact information for all the tenants. I personally like to send an email or send a text or call my tenants on the day when I take over a small multi-family. Remember, these are small places, two to four units. They expect to know the property manager. Reach out. Say you're excited to work with them. You want to learn a little bit about them. Give them your number. Say, if you need anything to call me, those are things you should do day one. I really recommend doing this day one. It will really help your relationship with your tenants. Make sure third, all your security deposits are being transferred over your agent should help you figure this out during the negotiation process. But make sure you have a bank account to put those in. You need to keep security deposits in a separate account from your operating expenses. So if you're doing this, set this up. Make sure you have copies of all the leases and all that. And if you're using a property management system, make sure that you put that all in. Ideally ahead of time, you can usually get the leases and contact information. But

44:08ideally what you do is just set this up. So day one, once you sign those pieces of paper, you already have your system in place. You can get rent ready, discount, bigger pockets pro. If you want to use that system, but just figure out the system that you are going to use. Now if you're going to use a professional property manager, just make sure you have one in place, right? Like, and then you've talked to them about these things and they've got everything covered. But other than that, closing really isn't that hard. It's just basically making sure you're ready to take over operations from the previous owner. Once you've done that, just go operate. Not going to get into that in super detail here, but we've plenty of bucks and stuff. You can check out on how to operate. But these are things like, you know, planning your renovations. So if you're going to go out and renovate and do value add, start planning those out as soon as possible. If you're going to do them right away, if you're doing a slow bar, you can wait. If you need to find new tenants, if they're vacant units or someone's moving out, just have your tenant screening process in place and get good at tenant screening. And that's it. Being a property manager is not as hard as people say it's going to be.

45:12I have everyone on the internet saying, oh, changing, fixing toilets stinks. It really isn't that bad. You will figure this out. It's really not that hard. And in my experience, managing two to four unit property, managing a single family, it's really not that different. You have one set of systems for four units. So yeah, you have four tenants who might call you, but there's only one boiler usually. There's one roof. There's one foundation. So yeah, there's more toilets and sinks that can break, but it doesn't scale proportionately, right? Your maintenance and repair needs for four units and a single property is going to be way less than four single family homes. So it really isn't that hard. And if you follow these steps, you can go out and buy a great small multi-family in this market. I'm seeing more and more of them come on the market all the time. Just set your goals and figure out what market is right for you. Figure out the financing. Yet your deal flow and figure out how you're going to see a lot of

46:15properties because a lot of them are trash and then run those properties through your analysis system. And once you've done that, identified ones that meet your criteria, go out, offer, negotiate, do that due diligence. Do not skip that step because that is super important in today's market is making sure you're getting all the concessions possible and you're paying the best possible price. Once you do that, close and make sure all your systems are in place from day one to be a great landlord who has good relationships with your tenants and offers good quality housing and places for people to live. That's it. Hopefully you can see that this is an amazing asset class for people in the bigger pockets community and you can absolutely go out and find great deals in today's market if you just follow these steps. That's our show for today. Thank you so much for watching this episode of the bigger pockets podcast. If you like this episode, make sure to share it with a friend and make sure to subscribe on YouTube or follow us on Apple or Spotify.

47:15I'm Dave Meyer and I'll see you all next time. 6 pack of beer? Yes. Get almost almost anything for game day, delivered with Uber Eats. Official on demand food delivery partner of the NFL order now. Alcohol 21 plus in Inselect City's product availability varies by region. See app for details. Show button here. Football is finally back and price picks is going crazy with the deals to start the season giving out promos every day in September. On price picks, you can make all the picks you want all in the same app and now price picks is available nationwide. So what are you waiting for? Lock in for kickoff because everyone and everything is on price picks. What you want? Download the app today and use code Spotify to get $150 InstaLion lineups if you win your first $5 line up. Price picks. Run your game.