Start out with 4 properties?

[Chris Blair]

I'm considering jumping headfirst into rental units.  I have an acquaintance that has been in the rental real estate market for the last 20 years and looking to retire.  He has 60 units in total that I can purchase.  I'm considering using a large portion of my traditional 401k investment to diversify in real estate.  Now is a great time to take money out of my 401k due to the Covid cares act so I would want to take out enough money while it is in place to avoid early withdrawal fees.    

My question is do you think it is wise or not so wise to buy 4 properties with 30% down on each for a total of 8 units utilizing a property management company for all? Am I getting in over my head or does it not really matter much whether I buy 1 or 4 since they are all fully rented and will be managed by a property manager while I work full time.

[Ryan Howell]

It would depend on the numbers...I wouldn't want to put 30% down.  Why not ask him to seller finance?  He may not want a large capital gain, or have a place to put the money and monthly income could be desirable.  Also, maybe he could finance short term, if longer term isn't desirable and after 6 months or a year, you could refinance.  If you have a good deal with some equity built in, you might be able to refinance with very little money left in the deal.