Where should I purchase my first Commercial Multifamily?

[Peter Torres]

I'm a new investor interested in commercial apartment buildings up to 1.2M. I'm a musician and willing to relocate anywhere in USA. I want to self manage and learn the business. I currently live in Dallas tx but its a hot market, I have been looking in to Killeen tx or Rio Grande Valley Area, Also Memphis TN. I would appreciate a word of advice, thanks

[Christian C.]

Whichever market you ultimately choose, make sure you understand in which part of the "real estate cycle" that market is currently in.  Is it up and coming (appreciating in value), stabilizing (a matured market) or currently declining?  Every market has what's called a "master plan" which you can probably get a pdf file just by googling the "markets name" and "master plan" together.  Once you understand whats being proposed by the local government for the area, then you can make an informed decision on whether or not you want to invest there.

I'd also look to acquire property for about half of your budget and pick a property you can successfully reposition.  Also, you're mentioning of moving to the property, which makes me feel that you're not taking into consideration you can have an experienced property management company help you be successful.  Look for property management companies that have a track record of repositioning apartment complexes successfully.  Ask for proof.  If you can purchase  a multi unit residence with an occupancy rate of 75% or less (as an example) and reposition the property by removing problem tenants and replacing them with quality tenants,  upgrading the property strategically, increase the occupancy rate to 95% and increase the rents to fair market value or better, then you have a gold mine!  If you maintain solid financial statements, you will be able to sell that property in the future a lot higher because you technically increased its value (regardless of the market) because of the increase of its Net Operating Income.  Investing in multi families is one thing, but repositioning properties is where the real money is truly made.  Good luck!