Multi-Family Scaling Strategy

[John Kirby]

Hello BiggerPockets community,

First-time poster here!

My wife and I are amateur property investors, and over the next year, we're aiming to get more serious by purchasing several small multi-family properties. Here's a rundown of our current financial situation and REI experience:

Current Properties:

1. Short-term rental in the mountains of NC:
2. - Owned outright
3. - Grosses $2-4k per month
4. - Valued at $400k
5. Condo in Charlotte, NC (long-term rental):
6. - Owned outright
7. - Rents for $2.9k per month, cash-flowing $2k per month
8. - Valued at $350k
9. Primary residence:
10. - Located in NC
11. - worth $800k, owe $200k

My wife is also a minority partner in an investment group that specializes in BRRRing foreclosed properties. She handles acquisitions, renovations, and rentals for the company and has flipped around 15 properties to date.

Financial Situation:

• Cash Available for Investment: $200k
• Equity: Willing to tap into the equity in our two rental properties for additional purchases.
• Income: ~$250k

Our Plan and Questions:

We're based in NC but are considering purchasing multi-family homes in the Midwest due to significantly lower property prices and perceived better cash flow opportunities. However, we have several questions and would appreciate the community's advice:

1. Midwest Markets - Which Midwest markets offer the best value for investors and present good growth opportunities?
2. Agent Search - Should we find an agent in each city/market we are interested in working with?
3. Financing - Should we secure financing before identifying a property or vice-versa?
4. Lenders - Is there a preferred lender for multi-family housing that's owned by out-of-state investors?
5. Scaling Ownership - Given our available cash and equity, what strategies would you recommend for scaling our property ownership efficiently?

We'd love to hear your thoughts and experiences! Any insights or recommendations would be greatly appreciated.

Thank you!

[Samuel Diouf]

Quote from @Amby Bhagtani:

Quote from @Brandon Croucier:

Hi John,

Great questions!

1) Specifically looking at the midwest, I personally am doing a lot of business in Ohio. After seeing my borrowers numbers, the cashflow is extremely good.

2) Yes! Find an agent wherever you are even considering, they will start sending you over properties that meet your criteria.

3) I do recommend talking to a lender and getting a pre approval. Get a good idea on what kind of property you can afford and understanding what that cost of capital will be.

4) On the investment side most lenders can lend nearly nationwide!

5) Given your cash and equity, I recommend just using the capital you have at a 75-80 LTV on future purchases, you can get yourself into about another $800k of real estate at extremely good rates. If you want to scale further that is when you would consider taking some equity out of what you already own.

 Where are you finding cashflow deals in Ohio?

 You can find plenty of cash-flowing deals in multiple cities here in Ohio. 

I like Columbus for a mix of cash-flow and appreciation. And I like Cleveland for heavier cash-flow.