Multi family residence or SFR

[Craig Oram]

Hi all,

I have a question. I currently own a couple of properties in Jacksonville thru a TKP and I have been daydreaming about what to do next. If and investor has say 500k(I have about 2M but would not be willing to go more then 500k) in cash reserves. Should that investor be looking at diving into a bigger deal such as 2 million apartment? Or continue with slowly building portfolio of ~200k SFR? How do you buy a $2M apartment? Is it the same as SFR? Do banks see it as you buying several properties? I don't even know where to start. Just looking for some opinions from more successful people then me.... stand on the shoulders of giants and all that.

Thanks

Silicon Valley Semi Retarded Investor.

[Lennon Lee]

Originally posted by @Craig Oram:

Hi all,

I have a question. I currently own a couple of properties in Jacksonville thru a TKP and I have been daydreaming about what to do next. If and investor has say 500k(I have about 2M but would not be willing to go more then 500k) in cash reserves. Should that investor be looking at diving into a bigger deal such as 2 million apartment? Or continue with slowly building portfolio of ~200k SFR? How do you buy a $2M apartment? Is it the same as SFR? Do banks see it as you buying several properties? I don't even know where to start. Just looking for some opinions from more successful people then me.... stand on the shoulders of giants and all that.

Thanks

Silicon Valley Semi Retarded Investor.

 Hi Craig,

The more straight forward advice would be: Go With What You Know.

That being said, I believe that some people tend to take that advice to literally and don't take the time to "Get to Know" and educate themselves about other options that are potentially better for their particular situation.

First thing that needs to be done (which you probably already did) is answer the question of how active you are looking to be in your real estate investments. The answer to this question will allow you to determine what strategy is probably best for you and will allow you to reach your goals faster.

If you are looking to be active and maximize your investment dollars by also investing your time then there are several strategies that you could dive into with those $500K. First thought would be to do the BRRRR strategy or build a Fix and Flip business and invest the proceeds in building a SFR portfolio.

You can definitely go ahead and purchase an apartment complex of $2MM, use third party property management and be somewhat active doing the asset management and making sure the business plan is accomplished.

And then if you want to go totally passive and get "mail money" you have REITS, Syndications, and some other strategies that will each be a good option for you or not, depending on your return expectations, risk tolerance, etc.

I used to own 4 SFRs and made the transition to large commercial multifamily. I initially started investing as a passive investors with experienced operators through syndication model and eventually built a business around that that allows me to keep my "not operator level active but not Limited Partner level passive" status, which was my goal.

To learn about how commercial lending works I would recommend you listen to Old Capital Podcast.

I'd be more than happy to chat further and go into further details about commercial real estate investing if you are interested. Just shoot me a PM.

Good luck Craig!