Decisions: $190k or $3.3M property

[Will Barksdale]

Hello BiggerPockets, long time reader, first time posting-at least in a long time.

I have the opportunity to purchase a couple of multifamily properties that are in the same North Texas Town, but are very different from each other. I have $50k in the bank after selling my first renovation/flip (took 30 months to sell, but made some good rent in the mean time).

Property 1 is class D with 16 units (all efficiencies) located in old downtown, near the hospital and in the medical center of the town. The building is old, but appears to be well maintained, and the downtown area has been slowly, but surely getting revitalized. I haven't gotten any actual data, but preliminary proforma suggests the property is under priced significantly based on the popular rules of thumb abounding on this forum, and has significant upside potential-nowhere to go but up really. Asking price is $190,000. I could easily get the local banks to finance this property with the amount I have to put down. I do not yet know how much renovation, if any, is required.

Property 2 is a class A property with 126 units ranging from 1 bd/1bath to 3bd/3bath units. It is a well known, centrally located, desirable complex. My wife lived there while we were dating, and it is really a great piece of property. Asking on that is $3.3 million dollars! The cash flow numbers work well, but the challenge is raising the capital to finance the property. Additionally it is in such good shape, and has low vacancy, therefore forcing appreciation would be very difficult.

My background: I've owned 2 rentals, 1 SFR, and 1 Duplex. I still own the Duplex. I've self managed for several years, but now I have an awesome property manager who has lots of experience managing everything from SFR to large multifamily, and other commercial real estate. The plan would be to have her, and her associates manage the property. I am no longer local to the north texas region, but I have excellent connections in the area, and know the market quite well based on previous experience living there. My goals are to eventually be financially independent based solely on passive income.

I'm looking for ya'lls thoughts on which deal you would do, and why. Purchasing neither deal is also an option. Thanking you!

[Will Barksdale]

@Jeff Greenberg you raise valid points, particularly considering the amount of cash I have in the bank. I'm thinking I should probably cut my teeth some more in the SFR world before trying to move to MF

@Jon Klaus My suspicion is that I'm not accurately classifying the property, especially when it comes to age. Although well maintained the property is 30 yearsish old, which probably places it more Class B, maybe Class C after doing some more learning on the topic. It's well maintained, and updated, pool, smaller clubhouse, nice landscaping. It is Camelot Apartments in Wichita Falls, if you'd like to take a look, I'd love to see what your thoughts are on it, if nothing else to cage my expectations, and help my learning. Although I just looked it up again and it appears to be sold...

I appreciate the feedback, and no worries about offending me or making me feel dumb...I'm used to it from my primary line of work, and just look to go to bed each night smarter than when I woke up!