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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
@Dassi Lazar good job, where did you buy your properties?, I do have 2 and I pay cash in Frederick, thanks.
Originally posted by @Mark Fries:
32208, 32254, some select areas 32206 and 32209
You ever been up to East Tennessee?
My story is very similar to yours. I started almost three years ago, I have six SFH in Atlanta and am closing on two more SFH in Birmingham, AL, this week. So far, it's been good for me. I'm getting great returns, but I have had to buy five new roofs out of the six Atlanta houses and a roof repair on the sixth. There is some appeal to me to having just one roof after all that. I think my long-term plan will be to do a cash-out refinance on the six in Atlanta and use that to buy a multi, assuming I can get even better returns.
Originally posted by @Mark Fries:
Been to Nooga a few times, that's it though
I have family that lives out there.
Great job acquiring 18 sfh. I have been investing for 4 years. Have acquired 13 sfh, 2 multifamily buildings and a student housing building. The BRRRR works on all of them. You need to do the following
- Buy at the right price
- Do a great job on the rehab - no lipstick on a pig
- Buy in good locations B & C neighborhoods - no war zones
- The rehab will force the appreciation - remember its location, location, location
- Be an expert in your market
- Be able to find properties where others cannot
- Based on location, great rehab, buying at the right price will allow you to attract better quality tenants and higher rents
- GREAT JOB
Originally posted by @Kenneth Garrett:
Great job acquiring 18 sfh. I have been investing for 4 years. Have acquired 13 sfh, 2 multifamily buildings and a student housing building. The BRRRR works on all of them. You need to do the following
- Buy at the right price
- Do a great job on the rehab - no lipstick on a pig
- Buy in good locations B & C neighborhoods - no war zones
- The rehab will force the appreciation - remember its location, location, location
- Be an expert in your market
- Be able to find properties where others cannot
- Based on location, great rehab, buying at the right price will allow you to attract better quality tenants and higher rents
- GREAT JOB
Hey Kenneth what state are you investing in?
Originally posted by @Amy Pfaffman:
My story is very similar to yours. I started almost three years ago, I have six SFH in Atlanta and am closing on two more SFH in Birmingham, AL, this week. So far, it's been good for me. I'm getting great returns, but I have had to buy five new roofs out of the six Atlanta houses and a roof repair on the sixth. There is some appeal to me to having just one roof after all that. I think my long-term plan will be to do a cash-out refinance on the six in Atlanta and use that to buy a multi, assuming I can get even better returns.
What price range are you buying in , in Atlanta?
Originally posted by @Berry Leonard:
Hi Phillip, my wife and I have acquired 18 SF rental homes. We purchase 2-3 properties per year, our target is 20-24 homes.
We only buy homes in owner occupied safe neighborhoods and target an average rent which is aligned to the average family income of the Triad NC area. We target $900 to $1400 rental rates with a 8-10% cap rate.
We have focused our purchases in a 10 mile radius, in many cases, we have multiple homes in the same neighborhood or on the same street. This allows us to reduce our travel and provide better service to our tenants.
Also, we seek long term tenants and incentivize four year leases with a minimum of two year lease. While we may lose some rent increases with long term leases, we lower our turn over and reduce our expenses. Also, our area cannot support constant rent increases so long term leases have much more benefit to our strategy. However, we are able to charge slightly above market rental rates because we do a good job rehabbing and maintaining our properties. I do not believe this model is possible with multi family.
We closely manage and maintain our properties to insure the highest quality product for our tenants. Also, we are a buy and hold investor and believe in maintaining our properties in top shape. We hear horror stories from many of our tenants about their past landlords and the poor maintenance. We believe this helps maintain tenants in SF rentals. When we secure a good tenant, we want them to stay forever.
We target tenants who want to live in neighborhoods and do not want to live in apartments or condos. I believe SF tenants take better care of our properties because they treat it like their home and we provide a high quality product.
We buy distressed properties, rehab and rent. Our goal is to rehab enough properties each year to minimize our taxes on the positive cash flow. I prefer to invest in more properties vs paying taxes to Uncle Sam. Our goal is to re-invest 100% of our profits for the next five years while paying down all of our mortgages. It is hard to find distressed multi family properties that would allow the same rehab cost to offset my cash flow and minimize taxes. One of our biggest goals is to minimize taxable income.
After our first four Homes, our progress slowed because we could not get under written by Fannie, so We only purchased with cash for a few years which slowed our progress. Several years ago, I found a local bank which allowed us to accelerate our purchases. We have decided to only take 10 yr loans because our goal is to pay off all the properties in the next 5-7 years. The principle pay down on a 10 year loan if 60% of the total payment. We typical finance one free and clear property to purchased the next property. After you acquire 3-4 free and clear properties, this model allows you to quickly add additional rentals. This model is possible with SF or multi family since we use commercial loans.
We believe SF homes offer lower risk if not leveraged to heavy and purchased at or below market price. Also, the rents must be aligned with the family income of the local market. If family incomes are NOT rising at the same rate as rents, increased rents are not sustainable.
I agree with other comments that multi-family should offer higher returns and faster equity growth. However, it requires much more due diligence than I have time to commit while working in my career.
We have developed a business model for our area and the numbers are easy to predict without much effort or added risk. We are conservative investors and looking for long term income growth and not short term profits.
As I get closer to retirement age, I believe SF properties offer lower risk with our business model vs MF.
Also, In our area, their our many major MF construction projects ongoing which will soon place a major strain on MF rentals. I believe SF properties are not competing with that market and have lower risk to the current over building we see in many markets.
This is awesome. I use a commercial loan as well . But have my properties on a twenty year note. Are you in Greensboro NC?
I invest in northern Illinois and southern Wisconsin. Buying distressed properties rehabbing them renting them out and refinancing them, BRRRR strategy. Purchase prices range from 80K to 110K. Much harder to find properties under 100K today, but it can be done off market.
Originally posted by @Kenneth Garrett:
I invest in northern Illinois and southern Wisconsin. Buying distressed properties rehabbing them renting them out and refinancing them, BRRRR strategy. Purchase prices range from 80K to 110K. Much harder to find properties under 100K today, but it can be done off market.
Yes I agree. I’m from a suburb of Knoxville TN. The area is exploding especially in the last 3 years, time I’ve been investing. I would like to stay in that 100k-110k and have for the most part. I rent those for about $1,250 per month. But this year was super inflated. I didn’t want to sit on the sidelines. I purchased properties for $116k and $120k and also purchased my first brrrr property for 100k. Also moved out of my personal residence and use it as a rental. I got a great deal on it 2 years ago for $165k and it rents for $1500. I believe I’ll stick with my model moving forward though
@Mark Fries
Good morning I am an investor in Pensacola
@Mark Fries
That word will preach right there
@Phillip Massey is your portfolio of 7 SFR owned free and clear? Because on the conventional market you are capped at 10 financed properties, after that you need to enter the "gray area" of non-agency lenders (the infamous subprime). If you finance them ideally is too get as many multiunit as you can and perhaps do non-agency on SFR after
- Rental Property Investor
- Greensboro / High point / Kernersville NC
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@Phillip Massey
Yes we invest in Greensboro, High Point and Kernersville. Most of our properties are in High Point and Kernersville.
Hi Phillip,
To answer your question, I was buying in Atlanta in 2016 and 2017 and spending between $35K and $50K. It appears the properties have basically doubled in value, which is good news for those properties but bad news for buying more, so I'm starting to invest in Birmingham, AL, where I can buy a 3/1 for $20K.
Originally posted by @Diana Muresan:
@Phillip Massey is your portfolio of 7 SFR owned free and clear? Because on the conventional market you are capped at 10 financed properties, after that you need to enter the "gray area" of non-agency lenders (the infamous subprime). If you finance them ideally is too get as many multiunit as you can and perhaps do non-agency on SFR after
I don’t have them financed conventional. I use commercial loans on them from a local portfolio bank
Originally posted by @Berry Leonard:
@Phillip Massey
Yes we invest in Greensboro, High Point and Kernersville. Most of our properties are in High Point and Kernersville.
I travel through that area on I-40 when going to see my wife’s family
Originally posted by @Brian Graham:
Hey Phillip, I'm also from the Knoxville area. For the properties that you bought under 120k, what where you looking at in terms of rehab costs?
I try to keep it under 8-9k . Obviously I said try
@Mark Fries congrats on all you’ve achieved and my goal is to get to where you are. I started in real estate three years ago and loved every minute of it. I then spent two years rehabbing a spinal cord injury but would love to find the returns you getting. I’m in the Tampa St Petersburg area. My other rental properties are in North Carolina which is just too far away to manage. I’d love to chat with you and ask for some advice. Thanks Jessica
@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