How did you decide on your current REI strategy?

[Jonathan Stone]

I am wondering how some of you started and what brought you to your current strategy. 

Specifically how did you find your niche in RE?  What made it clear to you that it would be or could be a good fit.  What eliminated other options and why.

[Aaron W.]

@Jonathan Stone I started by listening to BP webinars by Brandon Turner. He turned me onto multifamilies. I did research in them and saw the scalability of multifamily and never looked back. I like how you can put more units onto one piece of land which can multiply your returns when done right. I'm all about efficiency!

[Mark Fries]

@Jonathan Stone

I wanted maximum cash coming in every month.

I was not interested in holding 15 or 20 mortgages and making $200 a door....that's not real money ( I probably lose $200 a week I don't even know where it goes so I knew that wasn't the kind of money I was interested in making)..

So about 10 years ago I read an outdated real estate investment book at the library ( I'm not even sure people on this forum know what a library is..lol) called "the weekend millionaire" and I applied those strategies of buying up cheap cash properties. Nothing like a $50,000 house that rents for 950 a month.

I guess I would say the strategy picked me...not the other way around.

[Jonathan Stone]

@Mark Fries

Thanks for the reply.

Were these properties local to you? What year you start your RE journey?

[Mark Fries]

@Jonathan Stone

Yes, all in Jacksonville florida. Started in 2011

[Jonathan Stone]

@AJ H.

Thanks for your reply.

Are you doing multi family development or buying existing MF properties? Are you buying and holding or value add or flipping?

[Alexander Felice]

my first strategy was to get 10 single family houses in 10 years

then I found out that was way too easy from a transaction standpoint, and I realized that going over 10 houses started to decrease the efficiency of money versus the effort I had to put in the transaction 

so I bought a 24 unit C class, realized that it was WAY too small, the debt efficiency was too low, and tenant quality created problems I didn't want 

so I bought a 52 unit B class, and that was much better but going forward I'm looking for much bigger properties and higher quality tenant base. ~200 units A class would be ideal - highly efficient use of capital and debt, inherently low risk, and higher likelihood of appreciation. 

[Brian G.]

@Jonathan Stone researched several strategies that I then discussed with my wife. We settled on a strategy that we both felt comfortable with. In our case that is vacation rentals. We chose this because it’s an active biz that allows you to juice your returns with more time engagement. My wife is a home maker (ie stay at home mom) thus she has time freedom to run the day to day biz. The margins are great and it is line with our current goal of increasing our income.

[Jonathan Stone]

@Alexander Felice

Thanks for the reply! I loved your BP episode and like the idea of delayed financing to increase the speed of growth with BRRRR. Sounds like you have moved onto to bigger things at this point, and I appreciate those insights.

[Jonathan Stone]

@Brian G. Thanks for responding.

I love that you started by getting on the same page with your wife.  I recently read "The One Thing" and decided my first One Thing was making sure me and my wife were in alignment.  

We have discussed STR as an option and even looked at some possible properties but are nervous to make that time commitment. From the numbers I have seen PM for STR are often 25-35% of your gross. How are you and your wife handling that portion of the business? Self manage, with cleaning service only? Using a quality PM and finding properties that still meet your parameters?

[Aaron W.]

@Jonathan Stone I am buying existing multifamily properties where we can add value with a plan to hold for 5-10 years or longer.

[Brian G.]

@Jonathan Stone we self manage remotely, no way I’m giving up 20% of gross revenue when we can run our biz from an iPhone. It’s a big learning curve at first and you do need time flexibility to stop and engage an issue on occasion. However, once you go through the initial learning curve and get all set up, it doesn’t require that much time. It will likely interrupt your life at some point and one of you needs time flexibility but it truly doesn’t take a lot of time once all your systems are in place. And yes, the cleaner is absolutely the most important person (your eyes and ears) along with a handyman or two on speed dial. There’s a lot of technology these days. And again, self management is the key to profitability in the VR biz but you too can learn the ways of the force if you are motivated to do so. Good luck!

[Alecia Loveless]

@Jonathan Stone I've been involved in many forms of REI with various degrees of success over a 20+ year time frame. At the moment I've got a SFH and a duplex with a 4-plex under contract.

I've read many books and attended many webinars and while I have not ruled out the right SFH's I've realized that for scalability purposes larger MF properties make more sense.

I hope to settle in with these 7 doors for the first part of the year and get a management system in place while I research other properties.

I plan to research OOS MFH in the future if nothing turns up in my market. I am open to staying local if the opportunity arises or expanding my horizons as there appears to be value to be had in many other markets.

[Jonathan Stone]

Originally posted by @Brian G.:

@Jonathan Stone we self manage remotely, no way I’m giving up 20% of gross revenue when we can run our biz from an iPhone. It’s a big learning curve at first and you do need time flexibility to stop and engage an issue on occasion. However, once you go through the initial learning curve and get all set up, it doesn’t require that much time. It will likely interrupt your life at some point and one of you needs time flexibility but it truly doesn’t take a lot of time once all your systems are in place. And yes, the cleaner is absolutely the most important person (your eyes and ears) along with a handyman or two on speed dial. There’s a lot of technology these days. And again, self management is the key to profitability in the VR biz but you too can learn the ways of the force if you are motivated to do so. Good luck!

Thank you so much for this feedback!

I really think this could be our key to success as the destination areas we are looking at would be break even with a 25%+ prop management fee, but could be profitable if we managed ourselves. 

Do you use the properties yourselves at all?

[Jonathan Stone]

@Alecia Loveless

Thank you for the feedback. More and more I hear of people going larger and looking for efficiencies or moving to STR where there is more room for value add.