Advice on a Multifamily investment

[Jharod Holmes]

 I have two Partners along with myself. That are Interested buying a Multifamily (Duplex, Triplex, or 4-Plex) Rental Property in the San Antonio or Austin area to invest in. We are new to this and honestly just aren't too sure where to start.  I’d like to ask for advice on how to start the process, as well as insight to the Market period.

[Andrew Johnson]

@Jharod Holmes So I'll go counter to what everyone else is saying because...well...why not.  

You need to start with a timeline.  There are three people involved that could all have three different timelines.  Even if (one a surface level) you think "buy-and-hold" some people think that means 5 years and others think that means 50 years.  What's the exit strategy?  What if the property doubles in value in the next 5 years?  Does it change?  Will one of the three partners need liquidity (example: pay for their kids college) in 6 years but the other two won't?  Are the spouses all in agreement as well?  Timing even starts to impact how you will (in the future) think through decisions about repair vs. replace when it comes to cap-ex items.  There are 100 scenarios you need to run about timelines.

Things will change over the years so if you aren't in lock-step right now you'll likely not be able to navigate those life-hiccups that occur in the future.  If you can figure that out then you can start thinking through financing, type of property, San Antonio vs. Austin, etc.

If you disagree on timing just put your money in a publicly traded REIT. Actually, why I'm thinking about it, it's probably prudent to ask all partners why they want to do this instead of a publicly traded REIT that has diversification and instant liquidity (if needed). If the answers from any partners are "I don't know" or "What's a REIT?" or "HGTV made it look fun!" I'd run for the hills :-)