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Updated over 5 years ago, 06/25/2019
Single family rentals
I am interested in hearing from people whose portfolio consists of single family rentals. I currently own 7 sfr. I’ve had great success acquiring them over the past three years. But it seems like this is the point where most people start investing in multi family. I’m not really wanting to do that. I run a car dealership in Maryville TN and love my job. So I really just want to keep snagging up sfr. Hopefully over the next ten years I can acquire about 30 more. Has anyone taken the single family only route? If so please lend some information on why you chose it. My initial goal was 40. But with me only being 28 years old. I think I should be able to pass that up
Originally posted by @Diana Muresan:
@Phillip Massey ahh, I see. I am curious, why would take commercial loans and not conventional where terms are much better? Same for the renovation loans, HomeStyle FannieMae has renovation loans on investment purchases with only 15% Downpayment that includes the Reno costs plus you don’t need to make mortgage payments during the renovation, you can roll up to 6 months of mortgage payments, after renovation you can either sell or refinance as there is no pre-pay penalty
Because of the ease of doing business. I run a car dealership, soon to be two. So time is of the essence. I buy houses by txt messages. 20% down and amortized over 20 years. I’ve built a relationship with the lender. All I do is send the contract. When I get an agreement. Then don’t hear anything again until the day of closing
@Dassi Lazar Hi Dassi, great work with your SFR's! I close on my 2nd in January and would like to scale relatively quickly. I was curious how you paid for so many homes so quickly? Did you BRRRR? I haven't done one yet but that's the plan for my next handful of homes. If so, are you typically able to pull all of your cash back out by refinancing? And once you do that your mortgage is still low enough for the property to cash flow each month? Any info, tips and suggestions are appreciated! Thanks!
@Bryan Wegman Yes I do the BRRR method. I have invested some money (not that much comparatively) in some deals (for example if I love the area I will bid higher and keep some money invested). Each property is different. I have 2 properties that appraised for $20k higher than expected so I was able to pull a nice chunk of change out of it. My mortgages (includes taxes and insurance) are higher on these two but still at a number that I am comfortable with ($1200/month and rent is $1800/month - I made between $20-$30k on these deals I have 2 of them at this number). Other ones I have pulled some money out, broke even or keep some money invested. I started off with a $90k HELOC so my first one I kept $30k of that invested in the property.
I like creative financing. I am under contract on a deal now that my lender is letting me purchase with 20% in an LLC with a 30 year term. I found a property that is rental ready. Asking price is $125k. I came in at $110k (fully renovated the property is worth $160k). Seller countered me at $118k. This wouldn't work doing the BRRR method. So I spoke to my hard money lender and regular lender that I refi with these. My regular lender said he can do a purchase with a minimum of $125k purchase price. I am having seller pay transfer taxes and I raised my commission by .5% (I'm a REALTOR), and they are giving me 2% seller help. So now I need to come to the table with $30k. I asked my hard money lender if he would give me a short term loan on this $30k. We have a great relationship so he agreed to give me the $30k with $2500/month payments for 13 months. ***Note it is much easier raising $30k than bigger numbers. Yes, this will be eating into my cash flow (I have other properties that will take the hit during this time) but it is allowing me to buy this property without using any of my own cash up front and in 13 months I will have a low mortgage $800/month with rent of $1500+/month.
In 4 years the down payment will be completely paid off by the rent and my profit on this property will be higher than other properties I have.
FYI - my original offer was without financing help and a quick close. The seller will be walking away with an extra $2k in his pocket for a longer closing. I will be saving money on the refis and time it takes to renovate. I will be able to have a tenant move in ASAP.
I am a big believer in creative financing.
@Phillip Massey ah, I see, it costs you more but it takes less time and involvement.
I own around 100 townhouses, love’m. Cashflow is baller, works like apartments, but you can buy them by the unit. I also own a few apartments, bought a bunch in the recession and sold most of them when I found how much I loved townhouses. I hired my own full time PM, Accountant, and Handyman, merged that with cash for homes operation we now run with a sales team, and story writes itself. We buy a few every month. I spend all my time professionally racing mountain bikes. ✌️
Phillip excellent thread many good responses. Not sure what I can add but will give it a try. I own 60 +/- combination of 31 SFR and the remaining townhomes ( all in the same location ). We are also am in the process of building 12 duplex units and then another( 10 ) 4 families in 2019 . The duplexes are setup as condos from day one and the 4 families townhomes so we can pick off and sell when needed to scale other props . IMHO I prefer the SFR better for reasons already stated. I am a big believe in debt reduction along with cash flow, so have anywhere from 6 year fully amortized props to 15 with soon to be 20 on the new props. All our properties cash flow with monthly rental income of anywhere from 1-1.25% of values. We are custom home builders and as such have instant equity in all our deals with a current YTD vacancy rate of .7 and ,4% in both existing categories. For our purposes we apply the same concepts in new homes with our SFR in that we only purchase props that we can force equity in and get in and out with refi's with typically none of our own money. EG... we purchase for 50k ( lender gives us 100% off our LOC ) we put in 20k property appraises for 100k. We pay off the first loan get our rehab costs back and repeat. We have done this close to 40 times since 2015. We are of the same cloth in that at one point we too could have gotten better interest rates with secondary market money but could never have scaled as quickly. We have 5 companies but far and away love the rental game more than the other 4 combined.
Sounds like your off to a great start and have many informative posts within this thread.Best wishes moving forward!
Originally posted by @Diana Muresan:
@Phillip Massey ah, I see, it costs you more but it takes less time and involvement.
It really isn’t costing me much more. I’m getting a 5.25% rate
Originally posted by @Chris Youssi:
Phillip excellent thread many good responses. Not sure what I can add but will give it a try. I own 60 +/- combination of 31 SFR and the remaining townhomes ( all in the same location ). We are also am in the process of building 12 duplex units and then another( 10 ) 4 families in 2019 . The duplexes are setup as condos from day one and the 4 families townhomes so we can pick off and sell when needed to scale other props . IMHO I prefer the SFR better for reasons already stated. I am a big believe in debt reduction along with cash flow, so have anywhere from 6 year fully amortized props to 15 with soon to be 20 on the new props. All our properties cash flow with monthly rental income of anywhere from 1-1.25% of values. We are custom home builders and as such have instant equity in all our deals with a current YTD vacancy rate of .7 and ,4% in both existing categories. For our purposes we apply the same concepts in new homes with our SFR in that we only purchase props that we can force equity in and get in and out with refi's with typically none of our own money. EG... we purchase for 50k ( lender gives us 100% off our LOC ) we put in 20k property appraises for 100k. We pay off the first loan get our rehab costs back and repeat. We have done this close to 40 times since 2015. We are of the same cloth in that at one point we too could have gotten better interest rates with secondary market money but could never have scaled as quickly. We have 5 companies but far and away love the rental game more than the other 4 combined.
Sounds like your off to a great start and have many informative posts within this thread.Best wishes moving forward!
That’s freaking awesome man. I’m considering jumping into a townhome. Found a great deal on one so we will see how it works out. With the 60 properties do you have someone managing them for you?
Originally posted by @Phillip Massey:
Originally posted by @Chris Youssi:
Phillip excellent thread many good responses. Not sure what I can add but will give it a try. I own 60 +/- combination of 31 SFR and the remaining townhomes ( all in the same location ). We are also am in the process of building 12 duplex units and then another( 10 ) 4 families in 2019 . The duplexes are setup as condos from day one and the 4 families townhomes so we can pick off and sell when needed to scale other props . IMHO I prefer the SFR better for reasons already stated. I am a big believe in debt reduction along with cash flow, so have anywhere from 6 year fully amortized props to 15 with soon to be 20 on the new props. All our properties cash flow with monthly rental income of anywhere from 1-1.25% of values. We are custom home builders and as such have instant equity in all our deals with a current YTD vacancy rate of .7 and ,4% in both existing categories. For our purposes we apply the same concepts in new homes with our SFR in that we only purchase props that we can force equity in and get in and out with refi's with typically none of our own money. EG... we purchase for 50k ( lender gives us 100% off our LOC ) we put in 20k property appraises for 100k. We pay off the first loan get our rehab costs back and repeat. We have done this close to 40 times since 2015. We are of the same cloth in that at one point we too could have gotten better interest rates with secondary market money but could never have scaled as quickly. We have 5 companies but far and away love the rental game more than the other 4 combined.
Sounds like your off to a great start and have many informative posts within this thread.Best wishes moving forward!
That’s freaking awesome man. I’m considering jumping into a townhome. Found a great deal on one so we will see how it works out. With the 60 properties do you have someone managing them for you?
Best wishes
@Dassi Lazar Very creative. Thanks Dassi!
@Phillip Massey looks like my response did not go thru so here it is again. My assistant handles all our rentals from showings/ to executed leases-deposits to service. One of my theories is fix/rehab to the 9's so any service is minimal and that has payed countless dividends over the last 3 + years we have been purchasing - rehabbing - renting. There was a study done many years ago by NAR ( National Association of Realtors ) in which they asked thousands of buyers about their purchases . Here is what they found: it took on average a buyer 90 seconds to make a decision whether they were moving forward with the home they were viewing or continuing to look. Certainly they spent another 20 -30 minutes on the purchase side verifying they had made a correct decision but the saying " you never get a second chance to make a first impression" applies in my mind when tenants view our properties so we make them look like a shiny penny!.
Go get em!
I know advanced investors with hundreds of units that are almost all SF. It worked for them!
@Mark Fries what type of market A,B,C, etc are you buying in? Also how much updating/reno are you doing to you properties?
I am in a similar situation although with 1 property. Knowing what I know now about reno I'll be adjusting my buying criteria.
@Patrick M.
C class, 45k MAX all in. Rent 875-900, repeat...then repeat 50 more times...lol