Scaling from Small Apartment Buildings to Larger Deals in Texas.

[Rick Robles]

Good afternoon. We are in the process of purchasing our first 8 plex building in McAllen, Texas using a small bank 75% Loan to Value commercial loan. We have prior experience flipping and leasing Single Family houses but new to apartment buildings. Please advise how we can grow our business buying small buildings with High cash flow but Low Market Value appreciation. Apartment buildings take much longer to sell here and do not enjoy the Value appreciation in bigger markets. We would like to Buy additional buildings every year but Want to hear a exit strategy. The idea is to scale, sell and buy in hotter markets like San Antonio after a few years.

This is Rick from McAllen Texas and appreciate all you guys at Bigger Pockets.

[Kasey Villareal]

Hi @Rick Robles!

I am also in McAllen and understand your comment about apartments taking a bit longer to sell around here. However, I see rather strong interest from out of town buyers because the cost to enter the market here is so low. I've worked with several investors out of more expensive markets - CA, NY, etc - who find our prices much more attainable than buying in their own backyard and so therefore, I'd say your exit strategy would include getting your FOR SALE properties in front of out of town buyers. Bigger Pockets and Loopnet would be avenues for this. Additionally joining in our local REIA would connect you with like minded people who might buy when you are ready.

I think the benefit of investing here local vis-a-vis San Antonio is exactly that we aren't such a hot market. Your aren't competing much and can generally bargain down the price. On the flip side, is what you point out however, it's harder to sell. 

I bought my 1st 4plex in Edinburg about 6 years ago as part of a short sale and that turned out really nicely. We don't have too many of those but when we find them, they can be great opportunities because as Austin references above, if you buy right, you can sell a little lower when you're ready creating more demand for your property versus the competition. 

Anyhow Rick, would love to connect since you are local and we're always looking to connect investors with the right property or buy ourselves!

Kasey