Time to make my next REI move, looking for experienced help

[Peter Mason]

Looking for some advice and for some ideas I'm not thinking about to fully maximize my situation. I'll be as brief as possible. When I got into REI 5 years ago I had the ultimate goal of owning an apartment building (or two or three) one day. I currently have 10 SFH that I am renting out. What I would really like to do is liquidate all of them in 2016 and use the money towards purchasing the largest apartment I can afford, but that may not be the smartest idea. Here is where I need some ideas or advice.

And before anybody goes off on a rant about experience and gaining knowledge, I have to tell you to look at my profile first and also know that I am reading and researching as much as I can right now. I can only read and absorb so much so fast. So a few tips from some experienced investors would be greatly appreciated.

Here’s the situation in a nut shell:

Properties: (I would say Class B to B- in Gainesville, Fl.)

1. 1: $177 monthly cash flow, property value $20k - $30k, owned outright
2. 2: $240 monthly cash flow, property value $25k - $35k, owned outright
3. 3: -$119 monthly cash flow, property value $35k - $40k, $25k remaining loan (my 1st REI mistake)
4. 4: $210 monthly cash flow, property value $55k - $65k, owned outright
5. 5: $164 monthly cash flow, property value $20k - $30k, owned outright
6. 6: $242 monthly cash flow, property value $60k - $70k, owned outright
7. 7: $242 monthly cash flow, property value $60k - $70k, owned outright
8. 8: (3 units not a triplex, these are totals) $44 monthly cash flow, property value $150k - $180k, balloon payment due in 2017 for 25k & remaining equity loan on properties 6 & 7 $65k

Some scenarios I’ve mapped out:

#1- Sell ALL! Use money which would be approx. $260k-$350k after debt payoff and selling fees towards an apartment building

#2- Sell a few (#’s 1,2,3,4,5 and 1 of #8) paying off all debt and using remaining funds (approx. $68k - $117k after debt and fees) to buy a smaller apartment building. This would still leave monthly cash flow of $980/month with remaining 4 properties.

#3- Sell a few (#’s 1,2,3,4,5 and 1 of #8) payoff ONLY balloon payment and #3 Loan and use remaining funds (approx. $133k - $182k after some debt and fees) to buy an apartment building. Because I would still have the equity loan, my cash flow on the remaining 4 properties I would have would be $282/month after loan payments obviously.

#4- ? what do you think

Each of the situations I've mapped out have things I like. #3 is most attractive because it fully takes advantage of OPM. However, it limits the size of the apartment building I can get.

What also comes into play here is getting a loan to buy an apartment building. I’ve looked at some past forums and I am currently reading up on it, but any cliff notes on loan options I may have would also be appreciated (great credit and good household income outside of rentals).

Thanks in advance!

[Peter Mason]

Originally posted by @Joe Fairless:

@Peter Masonwhat are your specific and quantifiable short- and long-term goals? And how active do you want to be with your investment/s? 

You mentioned your goal of buying an apt building but I suspect that's a means to an end of something else. 

P.S. congrats on getting to this point! 

 Thanks Joe. Yes it is a means to an end. This is my unedited, literal written long term goal I wrote out for myself when I started a while back (5 years ago):

"I would like to be financially independent to the point I can comfortably take care of my family and have the ability to make the choice to quit my job by 2025. I will accomplish this by constantly bettering myself and my knowledge in Real Estate Investing which I will use to increase my net worth and residual income by ultimately owning 100+ units in the form of one to several apartment buildings"

My short term goal now (this has changed recently)

1. Purchase a 10+ unit apartment building  by the end of 2016. The main requirement for this building will be to add value and/or forced appreciation so that it can be sold by 2018 allowing the purchase of a bigger apartment building. 

Then repeat the following years. This is my strategy right now that I will use to get me to my ultimate long term goal.

How active with my investments....

I basically travel for a living and when I am home I like to be around my family so therefore beyond the time it takes gaining REI knowledge and the initial selling and acquisition of property, I choose to not be active with sustaining the properties. This is why I have used a property manager and my "team" with all I have done thus far. And it has worked out pretty well for me.

I hope that answers your questions.