Newbie from DFW, what REI strategy would you pursue if me?

Question

Hello,

My wife and I are are inexperienced real estate investors and are not particularly handy, but we have watch 100's of hours of HGTV so we probably know everything we need to know to invest in real estate, right? I'm kidding we know we have a lot to learn. We are in our 30's and ready to invest in real estate as everything else financially is going in the right direction.

The first question we are trying to answer is what strategy is right for us and I'd love it if anybody has any input that might help. We have capital, great credit, but not a lot of time as we both have demanding jobs and we have a small child.

My goal is to replace one of our incomes within five years through real estate cash flow. Based on the limited time we have I feel multiple SFR's where we use a property manager would require the least amount of ongoing effort while Multi-Family's would provide the best cashflow? As for the rehab work that would be required, I'd just use Angie's list or craigslist and use J.Scott's book as a check for reasonableness on fees.

I'm not working with an agent or anyone at this point? Thoughts on this or an agent in DFW you would recommend?

Thanks for reading,

Steven

Sam Bates · Answer

Steven,

Welcome to the world of real estate and Bigger Pockets. There are many strategies you can implement in achieving your goal of replacing either your wife’s or your incomes within five years. Below are three of the most common investment strategies.

• Single family homes – self managed or property manager
• Small multifamily – self managed or property manager
• Apartment complex syndication – passive investment

There are multiple avenues to finding SFR’s. You can use an agent like you mentioned, wholesalers, networking, auctions websites, or direct mail. You mentioned you have minimal time so the last few options might not be the best decision. The draw back to using realtors is many realtors only look on the MLS for houses and many times this is not where an investor wants to find a house. Self-managing properties can take substantial time especially during the rehab process or when you are locating a tenant to place in your property. A management company will reduce the number of hours you spend on your investments, but they also reduce your ROI and they do not care as much about your property as you do so things can fall through the cracks. There are many management companies in the DFW area so screening and selecting the right one that fits your needs is paramount.

Small multifamily investments are similar to the SFR’s as I mentioned above except the financing can be different and multifamily investments are valued differently than SFR’s. They are based off cap rates and net operating income not comps.

Apartment syndication is the least hands-on of any of the investment options. A syndication is a pool of investors that combine their money together to purchase an apartment complex. You can buy a yield or value add deal based on the partnerships goals. The partnership will usually have one lead or could have a couple of lead investors who have experience and manage the deal. If the deal is large enough the apartment will be able to support a professional property management company to manage the daily operations of the apartment. The partnership’s goal is to achieve a specified ROI then either refi and cash out or sale the property.

I’m an investor in the DFW market and have invested in all the strategies listed above. I’ve also flipped multiple houses the past few years. They can all help you accomplish your goal, you just need to decide which strategy is the best for you and your family. I have a business partner and we’ve created a partnership to purchase value add C class apartments in the DFW area. Our goal is to renovate and retenant the apartment. Please let me know if you would like to meet to further discuss.

Thanks,  Sam

Alberto Camacho · Answer

Basics here can be applied to any niche. Just change a word here or there and your off.

google  'syndication site:biggerpockets.com'.

Subscribe to the multifamily forum.

Listen to every multifamily podcast you can find.

Join an investment group that specializes in multifamily investing.

Offer to buy coffee, lunch, etc to a multifamily investor so you can talk shop. Myself I like the chai at Starbucks. :)

Keith Anderson · Answer

Alberto Camacho How would you suggest one educate themselves on that niche? We've been researching for a year and found next to nothing on joining syndicated apartment deals.

Steven Clements · Answer

Thanks Alberto C and James

James Wise · Answer

@Steven Clements

Welcome to the site.

If just starting off with a few SFR that are close to home I'd hook up with a local Realtor and self manage for awhile. A few homes does not take to much time out of your day and it will really help you get to know the in's and out's of the biz so you have an expectation of performance when you turn them over to a PM.

Good luck to you & I'll see you around the forums.

Alberto Camacho · Answer

Hi Steven,

Based on your goals you may be a good candidate for investing in a few apartment syndications. I would look for yield plays on stabilized properties that payout on a quarterly schedule. You'd be a money partner in an apartment deal.

Please get educated in this niche. You want to know your involved with the right people and the right deals.

The SFR route will take time from your family that you may not have. Even picking up a turnkey SFR portfolio you'd have to be involved with the management company to a greater degree than MF investing.

Newbie from DFW, what REI strategy would you pursue if me?

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