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Updated about 6 years ago on . Most recent reply

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245
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45
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Mike A.
45
Votes |
245
Posts

Having a hard time growing.. Looking for ideas

Mike A.
Posted

Hey all, 

I've been in the real estate game for a good many years, and I will say I've learned more from my failures than my successes.  I originally started with 2 and 3 family homes, which I purchased with cash.  Then I purchased one rehab in a good area, but been fighting with the city government on approvals for the last year.  And I purchased so far one multi-family in a good area, which is doing fine.  The others are in C areas and I own them outright.  I tended to buy the small buildings because I can buy them for cash and not have to worry about a mortgage.  Since most of these tenants are, well, low income, section 8/dss or blue collar, we've had a few evictions over the year.  It's annoying enough having to evict and turn over the unit, but it's even more annoying and stressful if I had to also pay for a mortgage.  I am thinking maybe I should shoot for larger 1.25 million dollar properties or higher so I can take advantage of the Freddie Mac Small Balance Loan program.  I do not seem to be growing with this small units.  I believe it's partly because over the past two years I had to rehab two buildings completely and redo and rebuild a commercial space.  I am still fighting the city on a downtown building, which is taking forever to get approved (they approved the work, but not the materials if you can believe this).  I can sell the building vacant and unfinished, but since I dumped 200k into the building (after completions, the building will be worth over 600k. Paid 35k for it), I think these three buildings have been taking a lot of my profits to get them completed.  Two out of three are now complete, so things should be hopefully smoother.  However, me and my team seem to always have to run after a handful of tenants to pay their rent.

So, in terms of DRTL, should I look into slowly selling off these small buildings (I'd profit 30%+ on each) and look for more expensive ones so I can grow?  I just do not feel like I am growing anymore.

Most Popular Reply

User Stats

252
Posts
175
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Charles Soper
  • Rental Property Investor
  • Merritt Island, FL
175
Votes |
252
Posts
Charles Soper
  • Rental Property Investor
  • Merritt Island, FL
Replied

Agree with @Luke Miller and @Greg Dickerson, systems and larger properties. You could 1031 into larger B and C class properties in good or gentrifying areas and get rid of the “chasing tenants for rents” inefficiency.  Can’t really speak to the commercial spaces but it would seem that just staying on top of the city folks to get your approvals so you can finish is key, get it stabilized and move on.

  • Charles Soper
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