St Charles County Market- who is having success in multifamily?

Question

Hey there BP friends-I've been working on expanding my knowledge about real estate in St. Charles county- more specifically the small multifamily arena. What I'm aspiring to do is purchase a fourplex to house hack to start- since I work in O'Fallon, I'm trying to keep the house hack as close to there as possible. So far the market appears to be pretty tight for that category with very few small multifamily properties popping up on the MLS. I'm thinking that finding an off-market deal via cold calling, direct mail marketing, connections, etc is more likely.I wanted to know how are you all doing in the St. Charles county market with small multifamilies? I would love to hear from those who already have them or are on a similar journey.Thanks for reading!

Mick Durr · Answer

St.Charles still has a very thriving influx of new population. Chesterfield and the "commons" area has had several initiatives to annex themselves from St.Louis county into St. Charles county. Obviously none has passed, but it gives you a general idea of the market and the pull to the counties to the west. Populations have increased exponentially (as I am sure you are aware being from O'Fallon), most of the population boom is coming from those areas migrating to St.Charles county. Wentzville will be getting an additional shot due to the new overpasses coming soon to create an "outer loop" from 70 (roughly at Foristell and connecting to Peine rd. on the 40 side). Very good opportunities for the buy and hold investor. Not great for me, due to the fact that I want multi-family units that will allow me to scale my holdings relatively quickly. I am more interested in cashflow. I want to get far more than 5 units (which will require a commercial loan in the future). As you know, cash flow is a greater contributor to the Cap Rate due to its contribution to net income. Of the 4 wealth generators, that is the metric that is most important to me. Cap Rates don't truly apply to non-commercial loans, but if you show a track record of good cash flowing properties, it cant hurt. Median Sales Price increased 7.3 percent to $220,000 for Residential homes and 10.0 percent to $174,900 for Townhouse/Condo homes. Days on Market increased 35.5 percent for Residential homes and 36.1 percent for Townhouse/Condo homes. Months Supply of Inventory decreased 22.9 percent for Residential homes and 15.8 percent for Townhouse/Condo homes.Last but not least, St.Louis and the surrounding areas are seeing about a 2.7% market supply. This is a very STRONG sellers market. With that being said, there is ton of residential "emotional" buyers pricing some investors out of the game. Still, for you, house hacking can still be done but it is going to take a keen devotion to the numbers. I apologize for rambling on, I could talk about this all day long. I hope this helps.Median Sales Price increased 7.3 percent to $220,000 for Residential homes and 10.0 percent to $174,900 for Townhouse/Condo homes. Days on Market increased 35.5 percent for Residential homes and 36.1 percent for Townhouse/Condo homes. Months Supply of Inventory decreased 22.9 percent for Residential homes and 15.8 percent for Townhouse/Condo homes.

Matt Conrad · Answer

Hi Cody - I have been on the search for awhile. My situation is a little different in that I am not house hacking. I just want to purchase and load it with renters. I have found very little available first of all. But when I do, the numbers just dont work with a mortgage. The prices are a little too high and the higher st charles county rents dont quite compensate.

Cody Smith · Answer

@Mick Durr that is a great set of info, thank you! I had not realized of some of the developments you mentioned so I highly appreciate you bringing that into the convo. What timeline are those numbers (on median sale prices and DoM)? Are they this last year?I would love to go bigger once I get my feet wet in small multifamily because of the greater control you do have over the value of the asset and the ability to scale. For now though, I'm going to go forward with the challenge and see what I can hash out here in St. Charles County. :) Are you planning on investing in large multifamily around here?

Cody Smith · Answer

@Mick Durr Hey Mike, thanks for your post. I have been thinking about where my next areas of attack may be, so thank you for the suggestion. I'm trying to see where I can get in the next few months around St Charles County before I begin to expand my search. What has you interested in St Charles County?

Mick Durr · Answer

Hello Cody,I am late to the party. However, as with Matt my situation is a bit different. First, I am not looking to "House Hack", I am also investing in a Multi-Family and loading with renters. I am from the Troy MO area and I can tell you that you are spot on. It is a very tight market right now and the numbers do not make sense in St. Charles county. If house hacking is your only option, I have seen several options a little out of your area (Washington). I have also noticed that there are some local agents that have some connections and seem to know about these super secret off market deals. Last but not least, I know you are house hacking, but I have been in contact with property management companies (building the real estate team), they also know of several "Off Market" deals that may fit your criteria. Happy hunting!

Ehsan Rishat · Answer

Hey @Cody Smith, everyone has access to MLS and it's not a good use of time to look for properties where hundreds of other investors are looking. If you're planning to go off-market you can try Listsource. This is what I do:1. I buy a list from listsource with these criteria (check photo below)2. I send a direct mail to the list (every month for 5-6 months)

Cody Smith · Answer

Hey @Matt Conrad, I've found the same thing to be true about the numbers from properties on the MLS. The St. Peters area seems to be even crazier. Do you know how they price the properties around here? I've read in David Greene's BRRRR book about how some areas in the southeast value square footage more while California is more heavily skewed towards proximity and condition.