Looking for buy-and-hold MF in midwest or southeast

[John Umphress]

Howdy!  Been lurking here for a while to pick up some data/observations on different markets.  In the process of selling a commercial property here in Austin and looking for replacement property.  (Austin has become a seller's market, and even San Antonio seems to have gotten frothy.  Besides, Texas property taxes can really impact your returns.)  Looking for class B - C MF properties with between 8 and 60 units - multiple properties are okay but would prefer that they be in the same market to facilitate management.  Turn-key is preferred but willing to consider a value-add deal.  Plan is to use  $1.6m of our own money and $800k from the bank.  (Might take on a bit more debt for the right property.)  Focusing on income over appreciation as this is our retirement, although my wife and I have several non-RE streams of income.  Have an experienced real estate attorney and bank that will work with us.

Looking at OK City, Kansas City, Cleveland and Chicago, and possibly some markets in the southeast and mid-atlantic.  Sub-markets near these and smaller markets are okay so long as they give us the income for the money spent.  Plan is to reach out to brokers and PM firms in those areas to establish relationships that could lead to off-market properties.  More than willing to hop on a plane to scout properties and meet with brokers/PMs.  While this will be a 1031 deal, the buyers of our property are willing to be flexible re the closing date to give us sufficient time to find replacement properties.

Would love to receive feedback on any of the above markets or any others that might meet our criteria.  Like I said before, primary focus is income - appreciation is secondary as we plan to hold this awhile.

Thanks in advance!

John

[James Wise]

Originally posted by @John Umphress:

Howdy!  Been lurking here for a while to pick up some data/observations on different markets.  In the process of selling a commercial property here in Austin and looking for replacement property.  (Austin has become a seller's market, and even San Antonio seems to have gotten frothy.  Besides, Texas property taxes can really impact your returns.)  Looking for class B - C MF properties with between 8 and 60 units - multiple properties are okay but would prefer that they be in the same market to facilitate management.  Turn-key is preferred but willing to consider a value-add deal.  Plan is to use  $1.6m of our own money and $800k from the bank.  (Might take on a bit more debt for the right property.)  Focusing on income over appreciation as this is our retirement, although my wife and I have several non-RE streams of income.  Have an experienced real estate attorney and bank that will work with us.

Looking at OK City, Kansas City, Cleveland and Chicago, and possibly some markets in the southeast and mid-atlantic.  Sub-markets near these and smaller markets are okay so long as they give us the income for the money spent.  Plan is to reach out to brokers and PM firms in those areas to establish relationships that could lead to off-market properties.  More than willing to hop on a plane to scout properties and meet with brokers/PMs.  While this will be a 1031 deal, the buyers of our property are willing to be flexible re the closing date to give us sufficient time to find replacement properties.

Would love to receive feedback on any of the above markets or any others that might meet our criteria.  Like I said before, primary focus is income - appreciation is secondary as we plan to hold this awhile.

Thanks in advance!

John

 A few thoughts on this. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

As for the specific markets you mentioned I know Cleveland. If you want to delve into this market further check out The Ultimate Guide to Grading Cleveland Neighborhoods.