Am I ready for multi-family's,apartments?

Question

So I'm  kinda frozen here...

This is what I'm thinking and what I think will take me to my retirement

We currently have two duplexes,one of them we completely remodeled  planning a flip(so probably over did it)the other one we bought with tenants and recently got one out and are doing a small clean up adding closets paint etc..Since we used all cash I was thinking about the BRRRR method and keep both for rental income.Lots of equity in both.

BUT I don't really want to do the repeat process,but we can go that way

And still bring in 1600. Positive cash flow after expenses.

And probably get 2 more duplexes or so.

Wouldn't it make more sense for us to sell both getting back all our capital and buy 2 multi's 10 units or more in the 500,000 range putting down payments of 30 to 40%.

There by getting it done.Getting the cash flow to where we can semi- retire.A management co etc.

Is this not what we're working towards.

OR IS THERE SOMEONE WHO SEES ANOTHER SCENARIO

Can you talk me out of this......What headaches are involved in multi's

I can also wait to find them where I can add value rehab add AC get the rents up etc.

Brian Adams · Answer

@Shawn Corcoran, BP has a lot of great content on syndications.

Feel free to check out my thread about doing a syndication when I closed a 240 unit deal a couple months ago.

Live Deal Case Study - 240 Unit Syndication - Bring Your Question

Sam LLoyd · Answer

To help with this, I'd have to know what returns you'd expect (and be realistic) from the multi-commercial. In my recent experience, getting commercial money is a bit harder than residential, and the LTV as well as interest rates are worse. Having more duplexes will have to more liquid, get you into the residential financability, and also have a bigger pool of buyers if you need to get out. I'm not sure about your area, but here in Alaska, there are some rules that make duplexes easier to manage. For example, here if it's one or two units, the landlord does not have to pay for trash service.

Summary: Without more information, I would refinance right now, taking advantage of 30 year money at great rates, and put that money into the highest return investment. And by highest return, I'm taking into account that managing duplexes is easier, and time is money... so not necessarily the highest cash-flow, which could be the apartments.

Summary: Without more information, I would refinance right now, taking advantage of 30 year money at great rates, and put that money into the highest return investment.  And by highest return, I'm taking into account that managing duplexes is easier, and time is money... so not necessarily the highest cash-flow, which could be the apartments.

Anthony Palmiotto · Answer

I'm going to guess that your expenses/vacancy/bad debt is going to total more than 25% of your income. Probably closer to 40-50%.

Lisa Misuraca · Answer

I get it...and I've been told repairs are much bigger on large complex's

Ease of operation and easier to sell,better loans etc.

So I'll keep rolling,and acquiring duplexes and 4 plexes.

Thanks,Lisa

David Faulkner · Answer

As an alternate, what about picking up 4x4-plexes = 16 units + 2xduplexes = 20 units. Acquire and rehab them the same way you did the duplexes ... yes it is a lot of work in the short run, but the safety, scalability, and equity of doing it that way is better in the long run IMO. The benefit being that it is a slow and steady and IMO safer way to scale, 30 year fixed residential mortgages with ultra low fixed rates (that you won't get with commercial financing), and easier to sell if/when you choose to. Later on if you want to venture into commercial multis you could save the cash flow, cash out refinance, or 1031 exchange any of these 4 plexes, and by that time you will be much more experienced in multi-family investing. Or you could just keep accumulating 4-plexes until you hit your 10 mortgage limit (+10 for your spouse, if applicable) ... I would think that 10-20 4-plexes should be enough to do it for financial freedom.

Leslie Pappas · Answer

Regarding syndications, if you are an accredited investor, you can buy into $50-125M projects with as little as $100,000 and diversify for some added safety.  Professionals with decades of experience and very impressive track records do all the heavy lifting for you.  You get potential cash flow and appreciation.  Loans are non-recourse.  This is the world of Delaware Statutory Trusts. I wrote a book on this that was released on Amazon in January called Cashing In Tax Free. If this interests you, please connect with me here on BP let me know if I can help. Leslie

Shawn C. · Answer

@Brian Adams What is a syndication deal and how does one go about doing that. I too would like to invest in mutifamily and am currently researching information on the subject. Thanks.

Lisa Misuraca · Answer

Do plan to use a management company.10units 600.00per

x2=12,000

Mortgage taxes ins payment

1700.00x2=3400. 15years at 6%

Other expenses vacancy loss

Guess at 3000. Monthly

5600. Net 67,000

Am I dreaming?Or about right..

Brian Adams · Answer

@Lisa Misuraca, if you cash out the duplexes to acquire 2 - 10 unit deals, would you self manage or engage the services of a 3rd party management company?

Know going in if you are self managing, with more units it could create more headaches such as dealing with tenants and other issues. If you are wanting to move towards semi-retirement, managing the deal yourself might not be the best choice.

My model is acquire 100 to 400 unit complexes and use 3rd party to manage the day to day operations.

If you are looking to own multi's, but be more passive, you may want to consider participating in a syndication.

Am I ready for multi-family's,apartments?

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