It Feels Good....I think

I love real estate.......it truly makes me happy.  I like reading about it, talking about it, but most importantly I like buying real estate!

Although I've been an active investor for over a decade, it's only been very recently that I decided to 'ramp things up'.  During the Christmas holiday (2015) I finally took some steps to become a more serious investor.

I re-read some of my influential REI books

I put together an 'investor profile' which took a few hours

I reached out to a local mortgage broker and set up a meeting.

I reached out to a real estate agent who specializes in investment opportunities and set up a meeting.

I hosted a REI info session for 10 of my colleagues (I'm a school teacher)

Then, I started getting down to business and analyzing deals.   I used the BP calculators and started crunching #'s.  I found a deal for a 4-unit building that looked good, the #'s worked, and I submitted an offer.   At the same time, a retired plumber I used to use told me he was selling a 5-unit buliding in my town.  I ran the #'s and it also looked good. Similarly, we set up teh purchase and sale agreeement.   

In a nutshell the deals looked like this:

4-unit - purchase price of 135k.   $2750/month gross rent.  Tenant pays power.  Landlord pays heat.   

5-unit - purchase price of 175k.   $2400/month gross rent.  Tenant pays all utils.   

Now - in a bizarre twist the money for the downpayment money for these buildings came from an insurance claim on another 4-unit building i owned that was burned to the ground by an electrical fire (noone was hurt).   

All that to say, that I was now the proud owner of 9 more units to bring my total # of doors to 17.  While this is hardly earth-shattering, it brought me to a very important decision - should I continue to manage all 17 units or should I look for help.   With a full-time job, a family, and a few other things on the go I decided to 'take the plunge' and look for some property management.   

I ended up with two different managers.  The 5-unit building is now managed by a tenant of another building I own - he has his own small 'handyman' business and is well-liked and respected in town.  We worked out a base rate for him to manage the property ($25 x 5) plus he will receive the business to turn units over when the time comes.   The 4-unit building is now managed by a man who is a tenant in one my friend's bulidings.  Similarly, he recieves a base rate ($25 x 4 + $25 gas) per month plus he will get small odd-jobs that crop up at the units.

Although it's only been a few weeks - it's a very strange feeling to know that i'm no longer the point of contact for 9 new tenants.  In fact, of the 9 new tenants, I've never even seen 8 of them.......there is a part of me that absolutey loves not receiving the calls while part of me misses it.......I suppose I'm still in that transitional period of moving from one level of investing to another.

At the end of the day however, I know that it's fantastic for my real estate business.  Not only have the two managers BOTH mentioned they've heard about new properties that are coming up for sale - thus far they're doing very good work and keeping the tenants happy - which was my main concern.  

The extra time has allowed me to really dig into what a successful JV partnership looks like as well as continuing to analyze deals.  The best part is that my new broker and agent know that i'm not just a tire kicker and have consistently been bringing me opportunities that are off-market and potentially very lucrative.  

It was a very difficult decision for me to give up the management of my new buildings but in the end I realize it's the best way to help me grow my business.  I plan to take advantage of the extra time and knowledge that i've gained by securing more deals and growing my portfolio.  So yes, in the end, hiring some part-time management help feels good!