Analyzing property with rent control

[Danielle Bennett]

Hi BP community!

I am looking to get some perspectives and suggestions for some shifts on our RE journey.

I am not new to real estate generally, but new in some ways. I am a principal in a small family business that owns GP interest in 800+ affordable units (tax credit financed) in CA, AZ, NV operating for 15+ years. My company continues to acq/rehab tax credit properties to build portfolio (or maybe not). Tax credit/affordable MF has is pros/cons. Pros include cash developer fee, cash flow and asset value with no long term cash invested (pursuit costs at risk repaid at closing), minimized risk with rents below market. Cons are that tax credit financed properties are highly complex and take a TON OF TIME, with uncertainty of execution (waiting agency/local approvals, etc. As with many aspects of RE these days, it’s harder to find deals that work, patient sellers, and many agencies are more interested in new construction vs. acq/rehab. Multifamily value add assets for cash flow. Looking to develop acquisition strategy (not using tax credit equity) using with debt our equity and/or with partners), value add, HAP contract with MUTM potential a plus.

On the other side of the same coin...

My husband and I own a 4-unit in Chicago that we purchased with FHA and without a specific plan BRRR'd but have gotten stuck on repeat. That was 9 years ago...we now live in Los Angeles area. Currently self-managed, but prefer not to do this long term. We are trying to decide if we refinance, sell and 1031 exchange into a larger property. My goal is to develop an active investment strategy leveraging our equity in this property, possibly as investor along with my company.

I feel like I am working hard, but not smart (on both sides of the coin). I understand RE fundamentals, and yet not sure to begin - driving for dollars (what exactly does that mean one does?), calling brokers to look for off market deals? West Coast/Midwest? Is it better to focus on 1-4 unit properties, small commercial (5+ units) with our own equity, or mid-size commercial (50-100 units) with partners. I realize I’m all over the place at the moment and trying to hone in on a focused strategy to achieve my goals; the goals being to generate cash flow, wealth accumulation for financial freedom.

I appreciate any insight, and specific suggestions you can share!