Saving to buy a big apartment complex

[Eric Bilderback]

I am curious if any of you have thought of how to save money/capital and move into a giant (for me) 50 unit or so apartment complex.  I hear investors compare it to the game of Monopoly 4 houses for one hotel.  Tactically, however selling 10 homes to trade into a giant apartment complex would be difficult.  My specific situation is I did a 1031 exchange into a 15 unit apartment, which I am hoping in 5-10 years will allow me to trade up into the big time (for me) 50 or so units.  I want to invest my current profits and any other money I can scrape together into more real estate.  Probably a house or two per year until I have enough capital to invest in a large multifamily.  That cashflows good enough to quit working.  I have begun to wonder as I am looking at all of these little houses what the exit would look like.  I am thinking maybe I should hold off and buy fewer more expensive properties to ensure I don't have ten or so on the market all at the same time, when I will hopefully be trying to execute the final part of my plan and consolidating all of my capital for one property.  The down side of buying bigger properties is it will take longer to save up for them.  Idol money is not good and could cost me valuable time.  You guys love this stuff as much as me.  Do you have a similar plan and if so how do you plan on cashing in all of your houses for a hotel?  

Happy Mothers Day to all you badass investor moms and soon to be investor moms out there,

[Oren K.]

Eric,

Remember that as you build your SFR portfolio one or two units at a time, you have the option of selling them as a package. The downside, is that you will be selling the package to other investors who will look at them as you do vs. to people who will live in them and likely pay more for each unit.

In terms of bigger and 'higher' quality; that is usually the path that most investors take. We start out chasing cash flow regardless of quality, build a base then buy higher quality at lower cash flow. Or to phrase it another way, start with high risk high reward and move when you can to lower risk lower reward.

A lot of hard work and a bit of luck will get you where you want to go.

Good luck,

Oren