Starting in Multi-Family Real-Estate Investing after 65

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Starting in Multi-Family Real-Estate Investing after 65

Dan Wiland
Investor · Yukon, OK · Member since 2016 · 5 posts · 0 votes

I recently retired and am considering getting started in multi-family real-estate investing. I will be selling my house soon and am considering buying a quadplex as a home and investment property, then adding more multi-family properties over the next 5-10 years, 50-100 doors. 

For experience: 
I have owned direct marketing sales organizations, retail stores and a construction company, worked as a computer programer/systems analyst, employed or supervised up to about 25 people at various times, purchased and paid off 2 homes, negotiated and managed many software consulting arrangements to success and have been successful investing inside of IRAs for 20 years. 

After reading BP forums and website, listening to podcasts and reading books I like the idea of real-estate investing but have never been a landlord. I would not hesitate except I've read of so many people starting out much younger, then putting things on "autopilot" when they retire, the age I would be starting out. 

I've looked in the forums and searched the website on this subject but not found anything. I would appreciate if anyone could direct me to such information here on BP. 

I would welcome any advice or suggestions or real life stories from others who might have some insight on this. Are there others here who have, or know of others who have started real-estate investing in their mid 60s? 

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Bettina F.
Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
9y

I disagree.  Early retirement is the perfect time to buy multifamily.  Much of your life experience will help in being a LL.

In 2011, my husband and I bought the property that would become our retirement home.  We rented this out for 2 years.  Due to high property taxes, we did not want to retire in the big, expensive (but paid for) house overlooking Puget Sound.  We bought in low cost Northern Idaho.  In 2013, when my husband was 62, we sold the house overlooking Puget Sound and paid cash for a 6 plex in Northern Idaho with the proceeds from the sale of the Puget Sound house.  Paid no capital gains, since were both over 55, and moved to our retirement property in Northern Idaho.  We purchased two single story triplexes that face each other to form a courtyard.  We are healthy enough to do most of the painting, mowing, and day to day management ourselves.  We have a trusted handyman for the items we cannot do ourselves, but with YouTube our skills are expanding daily!  (I have become an artist in drywall repair!)  Since the building is paid for, it cash flows like a herd of cash cows.  Rents are rising in our area.  Our building stays full,  and we had NO turnover in 2016.   We average 4 hours a week in managing the property.  This includes mowing the lawn and snow blowing in the winter, rent collecting, and bookkeeping.  (Luckily, our property is near water and that means it is often warm enough that a light snowfall melts by mid-morning.)  Since we are retired, when we do need to put in the hours rehabbing a unit, we have the time without the stress of juggling jobs and LLing.

My husband and I both have significant savings in 401Ks,  We wanted the keep the same proportion of our portfolio in RE, rather than placing it all in the stock market.  We always have the option of hiring a full time property manager in the future.  Our daughter will inherit the property on its stepped up basis when we die, and it should provide a nice income for her.

It has been fun to step out and do something different at this stage in our lives.  I never would have been happy wasting my retirement on the golf course.

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  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y

    Congratulations and good luck.

    My mother in law started REI in her early 60's when her husband died. Long story, her husband thought real estate investing is gambling and speculation, so they always lived in a SFH. But they lived a frugal life, and their savings plus his life insurance came to a few hundred thousand dollars. That was in 1980.

    Now, the problem with you retired is you don't have as much W2 income to qualify for mortgages. In her case, her kids, that's my wife, her brother, her sister all had high W2 incomes, combined with her cash hoard, was able to pick up properties quickly. For instance, she bought a duplex in NYC for $110K in 1981, sold it later when prices peaked at  in 2005 for $850K. The profit from only one investment exceeded all her savings in 1980. We all partnered with her, and between all of us, we quickly picked up in the early 80's about 8 properties before the price run-up here.

    In my case, I started with triplexes and invested in a few. But I also had a busy programming job that paid well. And the triplexes over time really exploded in value, so I did very well as well.

    3Reply
  • Kerry Kiang
    New York City, NY · Member since 2015 · 2 posts · 0 votes
    9y

    Hi Frank, I live in NYC (grew up in Queens) and as a newbie I'm not finding any multi (duplex or triplex) in NYC.  Reading your post gives me hope, can you please tell me what neighborhoods you are referring to for both your mother in law & your properties?  Thank you!

    0Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Kerry Kiang:

    Hi Frank, I live in NYC (grew up in Queens) and as a newbie I'm not finding any multi (duplex or triplex) in NYC.  Reading your post gives me hope, can you please tell me what neighborhoods you are referring to for both your mother in law & your properties?  Thank you!

     Kerry, in NYC, we call these 2 families, 3 families. I grew up in Astoria, Queen, you walk down the street, and there's plenty of them. When I was actively buying real estate, I drive to and walk around various neighborhoods to get a feel for it.

    I googled 2 family homes for sale in Queens and I got: Two family Queens

    I spent several years walking neighborhoods, such as Glendale, Ridgewood, Woodside, Jackson Heights, Sunnyside etc. I also investigated Philadelphia back then with the thought of doing out of state investing. At the time prices there were a fraction of NYC, and my wife and I found co-workers who commute to Manhattan to work from Philadelphia. 

    We bought properties in Elmhurst, Fresh Meadows, Bayside, Rego Park. 

    My mother-in-law discovered an interesting theory in investing in Queens. Buy in areas that Chinese investors haven't gotten too. Then, when they discover it, they drive up prices like crazy, then you sell, to a Chinese buyer of course, that overpays. We sold our rentals in Fresh Meadows and Rego Park, to Chines buyers and believe that we got a good prices because of it.

    2Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    @Dan Wiland

    Is it your intention at this point in your life to continue working full time. That is what you are looking down the road at if you  are considering starting investing at your age. Ten years is a very short time period to consider investing in real estate. You will need deep pockets without a high paying W2, and expect to see little return for many years to come. Additionally when the real estate market turns you will lose your equity and be forced to depend on the rental income to survive the rest of your retirement years. At your age there will be no getting out.

    Bottom line is there are far easier ways to make the same return by simply parking your cash, if you have any, in a good investment fund.

    The reason to start young is because building wealth through investing in real estate is a long slow process.

    Old guys like us probably have better things to do with their retirement years than risk it all on real estate.

    1Reply
  • Dan Wiland
    OP
    Investor · Yukon, OK · Member since 2016 · 5 posts · 0 votes
    9y

    @Thomas S. That is the kind in insight I was looking for. I don't want to go back work full time. Maybe full time for a few weeks at a time not and then. I thought a property management company could take on most of the day to day operations and I could consult with them in person or over the phone/chat/Skype as needed. 

    I've been retired for 2 years and enjoy traveling 12 or 16 weeks a year. I don't collect SS yet (waiting for the 70 1/2 raise). I live off a pension and collect more dividends from stock investments (1 reg and 1 Roth IRA ) than I would be getting in SS and have been reinvesting the dividends. The pension covers my expenses and travel/entertainment costs.

    I will have the proceeds from my mortgage free home to get started in REI, I was thinking a dup/tri/quadplex might be better than a SFH and I could add 1 or 3 a year for a few years. Reading the forums and listening to the podcasts, Bigger Pockets has given me bigger ideas as many people seem to hold down a full time job and do REI on the side. But no, I wouldn't want it to turn into a full-time job. Thanks for the insight.

    0Reply
  • Dan Wiland
    OP
    Investor · Yukon, OK · Member since 2016 · 5 posts · 0 votes
    9y

    Thanks for the encouragement and well wishes @Frank Chin. My situation is similar to your MILs except I would't have family to give as much help as I perceive she got. Am I right?

    An inspiring story nonetheless. Thanks for the input.

    0Reply
  • Jon Lanclos
    Real Estate Broker · Houston, TX · Member since 2017 · 64 posts · 27 votes
    9y
    I would be Leary of 4 plex - you have more expenses typically than just investing in single family - you have to take care of the yard, pool, common area because your tenants will not - it's not enough units to have a manger so you will be the manager - on resale, your limited to pretty much investors only as buyers - single family you have more buyer choices on disposition - if you want to do Multifamily I would start with 59 or more units and take on a passive partner - that way you have critical mass which will justify a manager for you - just recommendation - good luck
    2Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Dan Wiland:

    Thanks for the encouragement and well wishes @Frank Chin. My situation is similar to your MILs except I would't have family to give as much help as I perceive she got. Am I right?

    An inspiring story nonetheless. Thanks for the input.

     Yes, that's right. Having ready cash plus good W2 income goes a longer way. You have more leverage. Plus at auctions, they sometimes want to see seasoned cash which we had plenty of when we partnered with her.

    1Reply
  • Kerry Kiang
    New York City, NY · Member since 2015 · 2 posts · 0 votes
    9y
    Originally posted by @Frank Chin:
    Originally posted by @Kerry Kiang:

    Hi Frank, I live in NYC (grew up in Queens) and as a newbie I'm not finding any multi (duplex or triplex) in NYC.  Reading your post gives me hope, can you please tell me what neighborhoods you are referring to for both your mother in law & your properties?  Thank you!

     Kerry, in NYC, we call these 2 families, 3 families. I grew up in Astoria, Queen, you walk down the street, and there's plenty of them. When I was actively buying real estate, I drive to and walk around various neighborhoods to get a feel for it.

    I googled 2 family homes for sale in Queens and I got: Two family Queens

    I spent several years walking neighborhoods, such as Glendale, Ridgewood, Woodside, Jackson Heights, Sunnyside etc. I also investigated Philadelphia back then with the thought of doing out of state investing. At the time prices there were a fraction of NYC, and my wife and I found co-workers who commute to Manhattan to work from Philadelphia. 

    We bought properties in Elmhurst, Fresh Meadows, Bayside, Rego Park. 

    My mother-in-law discovered an interesting theory in investing in Queens. Buy in areas that Chinese investors haven't gotten too. Then, when they discover it, they drive up prices like crazy, then you sell, to a Chinese buyer of course, that overpays. We sold our rentals in Fresh Meadows and Rego Park, to Chines buyers and believe that we got a good prices because of it.

    Thank you very much @Frank Chin.  Your mother-in-law's theory is absolutely right on!  If I could just figure out what the next "hot" area will be.  Astoria, Elmhurst, Sunnyside and Bayside have already been discovered.  I will keep doing more research, thanks again!

    0Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    9y

    "I've been retired for 2 years and enjoy traveling 12 or 16 weeks a year. I don't collect SS yet (waiting for the 70 1/2 raise). I live off a pension and collect more dividends from stock investments (1 reg and 1 Roth IRA ) than I would be getting in SS and have been reinvesting the dividends. The pension covers my expenses and travel/entertainment costs."

    Dan, If your're going to be traveling that much, you'll should have some way to covering things when you're gone. I once had a tenant that had a problem with the toilet while I was on the way to the airport for vacation. And my MIL's hot water tank broke on Memorial Day weekend while she's away. Fortunately, I help manage her property.

    You probably don't need an apartment building to solve the management problem. You can either provide rent concession to a tenant, pay a neighbor a little something to handle things while you're away. I done it both ways. I had my duplexes and triplexes, but had my sister in law, or mother-in-law over things while we're gone.

    1Reply
  • Tim Lindstrom
    Investor · Douglasville, GA · Member since 2014 · 313 posts · 181 votes
    9y

    I think buying a quad, and moving into one of the units is a good idea. if you buy at the right price point,  the other 3 units will pay for the property, and provide some cash flow.  This will allow you to live mortgage free at retirement.

    Get a management company to handle the tenants, and try it out for a couple years.  If it still seems like something you really want to do,  why not go for it, and buy some more?

    1Reply
  • Bettina F.
    Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
    9y

    I disagree.  Early retirement is the perfect time to buy multifamily.  Much of your life experience will help in being a LL.

    In 2011, my husband and I bought the property that would become our retirement home.  We rented this out for 2 years.  Due to high property taxes, we did not want to retire in the big, expensive (but paid for) house overlooking Puget Sound.  We bought in low cost Northern Idaho.  In 2013, when my husband was 62, we sold the house overlooking Puget Sound and paid cash for a 6 plex in Northern Idaho with the proceeds from the sale of the Puget Sound house.  Paid no capital gains, since were both over 55, and moved to our retirement property in Northern Idaho.  We purchased two single story triplexes that face each other to form a courtyard.  We are healthy enough to do most of the painting, mowing, and day to day management ourselves.  We have a trusted handyman for the items we cannot do ourselves, but with YouTube our skills are expanding daily!  (I have become an artist in drywall repair!)  Since the building is paid for, it cash flows like a herd of cash cows.  Rents are rising in our area.  Our building stays full,  and we had NO turnover in 2016.   We average 4 hours a week in managing the property.  This includes mowing the lawn and snow blowing in the winter, rent collecting, and bookkeeping.  (Luckily, our property is near water and that means it is often warm enough that a light snowfall melts by mid-morning.)  Since we are retired, when we do need to put in the hours rehabbing a unit, we have the time without the stress of juggling jobs and LLing.

    My husband and I both have significant savings in 401Ks,  We wanted the keep the same proportion of our portfolio in RE, rather than placing it all in the stock market.  We always have the option of hiring a full time property manager in the future.  Our daughter will inherit the property on its stepped up basis when we die, and it should provide a nice income for her.

    It has been fun to step out and do something different at this stage in our lives.  I never would have been happy wasting my retirement on the golf course.

    4Reply
  • Dan Wiland
    OP
    Investor · Yukon, OK · Member since 2016 · 5 posts · 0 votes
    9y

    Thank you for sharing your experience @Bettina F. I appreciate the downsides of the idea pointed out for consideration in this thread. I am also very encouraged to read about your upside experience.

    Thank you for taking the time and effort for a most helpful and informative reply.

    0Reply
  • Jeffery Waicak
    Investor · Massillon, OH · Member since 2015 · 266 posts · 156 votes
    9y

    it sounds like you want to start with a house back, live in one of the 4 units? That sounds like a good strategy to me. Yes you have to be responsible for the common areas and lawn care, but right now you're responsible for your own lawn care anyway. It can be hired out, as can property management. My friend who manages over 600 units said some of his best clients only have 1 or 2.  

      I could be wrong,but you seem to not really need the money all that much, but want the adventure of business.  That, my friend is awesome, I say go for It! You don't have a w2, but you have cash, time, and a lot of business experience. If I had to guess, you're going to do well.

    1Reply
  • Dan Wiland
    OP
    Investor · Yukon, OK · Member since 2016 · 5 posts · 0 votes
    9y

    @Jeffery Waicak Thanks. I appreciate the feedback and encouragement.

    0Reply
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