multi-family investing - good way to start in real estate?

Question

I am new member looking to learn more about real estate. I have full time job. earning very comfortable salary. looking mainly to create other income streams because of all the "what ifs..." and because I want to gain more freedom and time. no prior real estate experience. read couple of BP books and listened to a few BP podcasts. Multi family appeals to me due to the consistent cash flow but I do not know if it is a reasonable way to get started. Given my busy career, I am interested in learning about a decent method of investing whereby I can simply contribute funds to purchase deals and get certain percentage back. Would that be similar to crowdfunding or syndication? I am not sure which terms apply here. And not sure where to start. Thanks so much.

Alecia Loveless · Answer

@Zaid Mahmood If you’re willing to live in the multi family for at least a year the 3.5-5% down payment method is the best way to start your portfolio. Then after 1-2 years you move and buy the next multi and live there for 1-2 years with the low down payment again and keep doing this for several years and soon you have a nice portfolio.

If you don’t want to do this then I’d work on finding your location you want to invest in, either close to home or somewhere where it makes sense, Columbus OH is growing right now and is poised to take off with the University and all the tech growth going in there right now.

Build your core four, realtor, banker, property manager, handyman and once your team is established you are ready to find that property.

I don’t do too much hands on at my properties but sometimes I meet contractors there or let workers in units or lease units, but mostly my contractors do all the work for me. I probably on average spend about 10 hours a month on my real estate and currently have 7 properties and 25 units.

However once a week since they’re local to me I do spend about 2 hours and drive by all of them to make sure everything looks right, there’s no trash in the lawns, the yard is mowed, etc. The two that are farthest away are about 45 minutes apart which is the only reason it takes this much time. Since they’re my largest investment I think it’s important to pay attention to them.

Jordan Moorhead · Answer

@Zaid Mahmood passive investing in multifamily real estate can be a great way to make passive income and build wealth but you need to be careful and not only pick the right assets but also pick the right deal sponsors to invest with. Lots of people talk a big game but right now many multifamily syndicators are losing their shirts, I know because I'm in a few deals that aren't going well and know of many more that aren't. I like to invest both passively and actively personally and have learned a lot from doing both kinds of deals.

You're in a great market to invest in whether you do your own deals or invest passively with others. San Antonio has amazing metrics and is growing like crazy. I have some great vertically integrated multifamily syndicators I know there and can also connect you with a great Realtor on my team for the active side.

You're in a great market to invest in whether you do your own deals or invest passively with others. San Antonio has amazing metrics and is growing like crazy. I have some great vertically integrated multifamily syndicators I know there and can also connect you with a great Realtor on my team for the active side.

Jason Wray · Answer

Zaid,

It's actually a great way to start and build your REI portfolio by getting into a 2-4 Unit.  It’s a step process where you can put 3.5% to 5% down on a 2-4 unit as a primary.  As an investment its 15% down but usually offers a lower payment & higher cash flow.  Either way if you find the right deal that allows you to buy and repair/renovate you can benefit by taking cash out on the new ARV.

The cash out allows you to pull out your initial capital and profit to buy another investment rental.  The goal is the long game unless you flip the house and sell it but you have to calculate capital gains unless you buy again using a 1031 exchange.  If you have good credit and good income now is the time to buy and try to hold some long term rentals.  It will pay off in the long run and for retirement.

You want to examine all markets in and out of state and do not worry about your time you can find a good property manager to cover.  You can also find a good handy man/woman to help you fix things if anything breaks.  As with everything shop the costs and use Bigger Pockets for help.

Remington Lyman · Answer

I would recommend doing a house hack. Do as many of those as you can before you get married and have kids. That should give you the skills to do whatever you want in real estate

Anthony L Amos Jr · Answer

Welcome Zaid! Your in the right place. As a busy professional, you can begin by becoming a private money lender, investing in syndication, or REITs. Meeting local investors and joining a local investor association are great ways to meet investors who can provide you a good return. I have raised and loaned out private money for my deals.

Zaid Mahmood · Answer

Wow. Thanks to everyone who responded! I appreciate the support and advice. I definitely would like to start reaching out to some experts in my local area - I am based in San Antonio , TX but can also extend my area of interest to Austin as well. Does anyone have any contacts (ex. realtors, real estate investment companies) that I can get connected to ? I am also looking to attend local investor meetings just to start meeting people but thought I'd ask to see if any of you might have local connections. I would be mostly interested in rentals (whether single or multifamily) or even syndication companies that would help invest my funds in bigger properties.

Brock Mogensen · Answer

If you're looking to passive in your investments, syndication could be a good option.

Deciding to buy properties on your own requires a considerable time commitment up front. In the current market, it is a true grind to find deals that make sense. But of course, can be very worth it when you find the deals that make sense.

Kevin Kohler · Answer

Whether it is house hacking, BRRRR (harder these days), flipping, or passive investing, there is a beautiful multitude of options!  Spend some time identifying your "big why" that helps keep you on course to achieving whatever end goal you have.  Look at everything with a degree of pessimism until DATA POINTS can validate and verify claims and ideas.  Don't act impulsively!  Also, don't fall into the trap of analysis paralysis and remember it takes ACTION in some direction to get positive momentum!

multi-family investing - good way to start in real estate?

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