The Next Step - Business Plan Needs a Tune-Up

[Lee David]

I have been at this game for about 10 years now and own/manage about 20 rental units in my mid-major city.  They are 1-4 unit homes. Rental market is good and vacancy is not usually an issue.  They are cash flowing decently (about 100K/year pre-tax) and I have approximately 400K invested.  Some I own outright, others are mortgaged.  I do most of my own maintenance, but I do farm out HVAC on occasion or other major work that an individual cannot reasonably complete.  Most of my properties are in very good shape and there is minimal maintenance.  Of course, things break.  I'll be replacing a water heater this weekend. I repaired (I think...) a refrigerator last weekend.

I also have a W-2 job that pays me about 45K a year, but it has excellent benefits and I enjoy working for my boss as he is very lenient with my schedule.

So, here is my issue: My simplistic game plan of buy/fix/rent needs to evolve. I want to grow. However, I realize that I am rapidly approaching, if I haven't already passed, my upper limit for growth and efficiency. Plus, I have a family now and time with them is an ever more valuable commodity.  Thus, I would like to try a different approach where I am more hands off.  

I have considered apartments, but haven't seen any deals that really make me want to pull the trigger. Inventory for 1-4 unit homes is rapidly drying up, but there are still some deals to be had if you look in the right places. I've considered property management, but I haven't yet come across a company that impresses me - though to be fair I know that none of them will take care of the properties as well as I and I'm sure that this results in some bias. Also not crazy about some of the fees that I have seen...

I want the same thing that 99% of the people on BP want: Financial Freedom. That is to say, Financial Freedom where checks appear in my mailbox at monthly intervals and I am able to worry about the next deal instead of where I am going to get the replacement gasket for my 1985 Maytag refrigerator. I'm just about there, but for me the next step is critical and I could use some input.

Bascially, I am looking down two avenues right now:

1. Continue with the purchase of small multifamily properties and hope to find a management company that won't cause one of my properties to end up on the six o'clock news.

2. Create a larger search area for potential apartment deals. Yes, I know that there is stiff competition out there, but I am willing to try.

Am I missing something? 

And if it matters, I am 39 years old with both respectable liquid cash reserves as well as retirement accounts. Not really looking to do anything with the retirement accounts in terms of RE investing, but I'm also contributing to those as well. No debt except for the mortgages.

If anyone can offer any words of wisdom as to my next potential investment move, I would be greatly appreciative.

Thanks!