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Updated almost 4 years ago,
What Strategies do You Employ for your REI?
Hey gang, I've been thinking a lot about the different strategies out there that can get a bit overwhelming for new investors and even seasoned ones for that matter. What strategies do you employ for your REI and why?
BRRRR - This can be a great way to get started when you really understand it. I'm thinking this is a great tool that can fit with almost any other strategy. It can work well with single family, small multi-family & large multi-family. In some cases it can even mimic a "flip" if the numbers are right and you get some additional profit out of the refi.
Single Family Rentals - Cash flow, cash flow, cash flow right? Every market has different margins that are considered "good" so I am careful to think there is a rule of thumb to follow such as the 1% rule or $200 per door or the like.
Small Multi-Family - house hacks maybe? live in one unit and rent the others. I wish I had done this as a young man. I didn't have a lot of understanding in my youth and missed this opportunity. The idea is to spread out the risk of vacancy to smaller rents and higher returns. Our first multi-family was a 4 plex. 3 of the units pay for it and the fourth is profit. It has worked out well.
Value Add - larger multi-family - This can be good if you know how to raise the capital or have capital to work with to do the renovations. Find a distressed property to improve and significantly raise the rents. I did a 16 unit that we closed Dec 2019 for $925 and we're now getting an offer at $1.4. Not bad for a year's work.
Syndication - These are not for the faint of heart and involves the SEC, raising large amounts of capital and larger multi-million dollar deals. I'm learning this process and have made a few offers. No closings yet, but we're getting closer.
Lease to Own, Lease with Option to Buy, Owner Finance, Assumable notes, etc. etc. etc. There are so many different strategies that we could go on for days.
What is working for you and what led you to choose that path?