Buying a 16 + unit - Questions!

[Brendan M.]

Hi everyone,

I own one rental property and I am thinking down the road of what I'd like to do. I'm going to buy one more property in the Chicago area using an FHA loan and then I want to move on to bigger things. I really love the idea of owning medium to larger size multifamily value add properties. I like that the value is derived from the NOI and cap rates in the area - that gives the owner a lot of ability to dictate the price by lowering expenses and maximizing revenue. I was hoping to get some advice on what others have done in the past and what sorts of things you look for in properties. I'd love to hear stories on your experience.

PLAN: 

I'm hoping to purchase a 16 unit+ in the next two years. I'd love for it to be a value add property where I can refinance all my money out in the near term (1-2 years) once everything stabilizes. I'd raise money through friends and family. I'd love to hang out to the property long term but open to 1031 up to something larger down the road. 

Considerations:

• Is the population growth in the city positive? 
• Current cap rates?
• Room for improvement? 
• Will I get rehab budget from friends/family? Can a bank give me this money?

I'd be looking to invest in the MW. I'm considering Milwaukee, Quad cities, Columbus but open to others. I'd like to focus more on the process than any specifics at this point but I did want to give an idea of the types of cities. 

For people who have done this before, what are some things I should be thinking about? How did you go about finding deals? Was it through networking or just loopnet (I feel like people hate this lol) and just throwing out offers and seeing what sticks. Since I am in it for the long haul, I'm not going to rush into something but I feel like there are deals to be had with the right approach. 

Appreciate the help