It's Time to Move to the Next Level of Investing?

[Account Closed]

Hi BP veterans,

My buddy and I were fortunate enough and bought a couple of handful properties in the San Francisco Bay Area in the recent years. Since they have appreciated substantially, we're thinking of 1031 some of these into income producing properties. Looks like we might have to go out of state to achieve this goal.

If you have an option, would you buy 4-plexes or bigger? We have about two to three hundred of equity in each property. So every two sales would generate about a half mil.

Thoughts on where to buy and what size of complex we should look into?

TIA.

Minh

[Joel Owens]

Hi Minh,

What's you and your buddy's goal?? Hold for retirement with little cash flow, hold for mainly cash flow, or do another value play where you sell in a few years??

I have clients all over the country and some international. They look to Atlanta for yield and also other states as well. I work with them all over the country for multifamily.

If you are planning on buying out of state I certainly do not recommend buyer a duplex, tri-plex, four plex etc.

What you need is about a minimum of 50 units or more. You can have a full time manager that way and a maintenance person. Costs here you can land a per unit cost of about 500 to 600 rent for between 25,000 a door to 50,000 a door. The cost difference is in the tenant base, location, and age of the buildings, and construction type (all brick, hardi-plank, etc.)

Most deals are leveraged in multifamily. My typical deals right now if you have 600,000 to invest together for the 1031 you can go up to 6 million in purchase price.

10% buyer down
15% seller second
75% bank first mortgage

Rates on fully performing about a 10 year term with 25 year amort. at around 4.25% fixed. By leveraging you increase your cash on cash returns going in.

Anymore questions just ask. You can go from 4 to 5 million and set the rest of the cash as reserves if desired. Also if you are willing to partner with others you can take down and even larger newer building hundreds of units.