How should I invest $300k cash in a commercial multi unit?

Question

I would like to get into the commercial multi-unit. I have $300k as deposit and about $200k in equity in my properties but not sure where to start besides mls and loop net. Currently, I have a few properties and try to keep a maximum of 4 properties due to me being owner operated, contractor and Realtor. I would like to remain site contractor due to my abilities and love the work more than the free time. I can put a team in place for electrical and plumbing. I will hire office manager and get my broker license to have site manager do my leases. The reason for this change is I see myself getting tied of running from one property to another shortly. I need input from Bigger Pockets. Help me find the correct avenue to start my goal of owning a high-rise within 12 months. I would like to stay away from partners and investor teams.

Thank you for you advice.

Todd Dexheimer · Answer

Build relationships with the top brokers that are selling the type of asset you're looking for in the price range ($1mm-$1.5mm). This will help bring off market deals.

Also, go direct to owner. Cold call owners of buildings that fit your criteria.

Lastly, call property managers, appraisers, inspectors, etc to find out who is selling.

The main thing is not to wait for a property to hit the market.

Peter Nikic · Answer

@Hyacinth Dolor fortunately there should be plenty of opportunities in Bridgeport. MLS and loopnet should be fine. I would suggest focusing on the largest multi unit bldg you can buy (based on available cash) this should be roughly in the $2 mil range. This property should be as close to the train station as possible. You want more doors, less roofs, less heating systems (ex. 1 sixteen family is better than 4 four family).

Although I'm familiar with Bridgeport, I've never owned property there. I do know that the market there is not as hot as anyone would make it out to be, it's still Bridgeport. But I think you should be pretty familiar with it since yo're a realtor there.

If you have any specific questions, message me. I spend many days in Westchester County which is where my properties are.

Account Closed · Answer

@Hyacinth Dolor  so much to say!  Many options and directions you could go. Private message me if you'd like to connect. In short, what experience do you have with property management?  With 300k you could buy $1m asset  or so... probably 20- 50 units.  It sounds like you're looking to do minor repairs, rent it, then re-hab and sell or buy and hold for the long term?  Best would be to reach out to every broker, also target a specific area and market to owners to see if they are willing to sell.   I have a rental in Black Rock and live in SONO

Hyacinth Dolor · Answer

Thank you Guys and Gals for the ideas. Molly, Todd is right on. Peter, one roof idea is my ideal search in B+ area (North end or North Bpt). David is right. Not easy finding a good 1mil $ deal on north east coast. I’d prefer to go in alone since I’m qualified for a 1mil loan and putting all the cash. I’d probably go the route of learning the multi unit (high rise) operations with someone prior to purchasing. I’m a very experienced landlord so the concept should not be too difficult. My experience with partners have failed due to my doing. I tend to outwork everyone, very competitive in terms of meeting goals and putting the best product first. In my past experience with partners, they tend to go the cheapest route but want the Jones money.  I do not lower my standards. My last multi sale I put in the best appliances and granite in the worst neighborhood and sold it the highest ever in neighborhood within 1 hr on mls. I Tend to think big and bet on my skills. I think I’d go crazy with partners going cheap in a B+ to A neighborhood. I’m in for the long run.

Hyacinth Dolor · Answer

I’d like to purchase and hold. Pass on down to kids. 1-2 million. At least 10 units

Thomas Kristensen · Answer

@Hyacinth Dolor I am making my first plunge into commercial real estate through a syndication deal being led by an investor friend of mine. This way I will be able to learn about the process to grow as an investor while still putting my money to work in a larger investment.

I became part of this deal by letting people know what I wanted to do and getting my name out there in that space. If you have a local investment club, go to the meetings and start letting people know what you are looking for. There is always money looking for a good deal, and good deals looking for money.

Best of luck and keep grinding!

Hyacinth Dolor · Answer

Thank you Thomas for sharing your approach. Greg, I thought about that but I will get into such investments in the next 10-15 years. The reason is my kids are still very young under 3 &10 and my oldest 24 with no interest in real estate just the money lol. I’d like to see if my kids would really like that kind of investment first. It takes a lot for someone to get into real estate at such a large scale. My wife and I are plan on retiring in 16 years before she turns 55 and would only come in USA 4 months a year. So my long term goal is to have a property with lots of income and on one site. I know this sounds like little ambition but paying off debt is primary to us. We do not use credit cards and cash only. I know all about the benefits of expanding and leverage but I think my wife is allergic to debt. She was so uncomfortable with our first mortgage to the point I had to rent it out and buy another cash to get her hair to grow back. Not kidding. So my old school strategy is a safe balance for both of us. She likes the ability to just pick up and travel to Asia or Caribbean anytime. I think syndication would be best and stress free in the future but now I’d like to stay busy and not only be a stay home dad with minimum landlord repairs.

Craig Strain · Answer

@Hyacinth Dolor

I think like you do when it comes to rehabbing my homes. I like to create an experience and not just a place to stay. Sometimes I ask myself,

“Am I doing to much” and try to remind myself that this is a place for a tenant (they will not care for it like you will) and not myself... the internal struggles are real, but wealth in real-estate can be created with cinderblocks or stones, laminate or granite... i prefer stones and granite, but as long as we get there why complain...

Greg Dickerson · Answer

Sounds like you have a great plan and solid ambition. You mentioned not wanting partners but what about passive investors to help you scale? Your time is best spent finding deals, raising capital and delegating the days to day if you really want to create a legacy to pass on to your kids and their kids and so on.

Isaac S. · Answer

@Hyacinth Dolor I like your attitude about partners and  your self-realization. I have found that when you do your own work efficiently and/or your own contracting, the money you save from being attentive, knowing the true costs, and being  ready to do what needs to be done yourself, if need be(or because you enjoy the type of work) is easily enough to cover improved materials.

How should I invest $300k cash in a commercial multi unit?

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