All Forum Posts by: Charles Lambert

 Awesome, thanks! Yes, I am kind of torn between older buildings and newer, or even new construction, as I fear the older buildings could be money pits. I like the character they have, and many are in desirable locations. But, as you said, they could have been updated several times, and could be more modern than a 1990s building. I've seen some listings for 1920s to 1960s quadplexes that look beautifully renovated and appear to be turnkey. They will cost more, but for me, I think that's an acceptable trade-off as I am not really into doing major renovations.

Once I'm ready to buy my building, I'll be sure to do my due diligence and find one that has updated plumbing, electric, roof (especially if it has a flat roof), etc. The value is so much better with older buildings too. Though I also see the benefit in new construction, it could appeal to tenants who can pay more and the building will likely not need much or any work for several years.

Those other updates are good ideas too, and not overly expensive, like adding mini-splits, convert to gas (though I hear that natural gas is falling out of favor now due to gas emissions and the environment), or connecting to public sewer (though I've been looking at a lot of urban and suburban buildings that are already connected). But, if I find one on the edge of town or out towards a more rural area, if they are not already connected to city sewer and/or water, and it's possible to connect them, I agree, that would add a lot of value, and be more convenient and reliable. And there could be other ways to add value, ideally without spending too much.

I've seen some unbalanced buildings too. I didn't realize that's what they were called, but I liked them. For myself, I'd like a two bedroom (maybe even three bedroom) and rent out the 1 or 2 bedroom unit(s). And some I've seen have a commercial unit downstairs, like an insurance office, hair salon, restaurant, convenience store, etc. Those seem appealing since commercial tenants tend to sign longer leases and could potentially be more reliable than residential tenants.

I don't really want 100 doors, that seems too intimidating for a newbie investor like me, but... some investors encourage it. I guess "Go big or go home!" perhaps? It would be impressive to have 100 doors, but honestly, I think that would make my anxiety go through the roof knowing that I'm responsible for homes for 100 families or individuals.

Maybe it was here on this forum, or maybe it was in one of Robert Kiyosaki's books, but I recall recently reading that one way to do this is to finance everything and get a lot of doors for more cash flow. The other option is to pay cash for the buildings, but own fewer doors, however, one's net worth would go up quicker if the properties are owned free and clear, even if there are fewer properties, unless I'm missing something. Of course, in time, financed properties will appreciate and in the meantime, there was rent coming in from 100 doors instead of 10 doors, but also mortgages to pay on those 100 doors.

I'd feel more comfortable with a smaller number of units, with my first one probably being bought for cash (and I like some of the benefits listed in this thread for paying cash). Then once I get comfortable, maybe get a few more properties over the next few years, but I probably won't be able to pay cash for those, so those would be financed. And, I'm in my fifties now, so not as much time to wait for a financed investment property to appreciate if I had bought it 20 years ago, like I wish I had. 

BTW, sorry for hijacking this thread, but there is so much relevant information here and just what I was looking for, in addition to the OP.

I'm starting to see the benefit in full turnkey, especially new construction turnkey, though most are SFH and duplexes, not multi-unit buildings. But, better to think through all of this now and ask questions rather than just jump into something based on intuition or just one perspective. I probably wouldn't sleep well if I didn't have a sizeable contingency fund to cover costs during extended length vacancies or major repairs, or even minor repairs.

From a risk aversion perspective, I think a new construction duplex in the suburbs would be a great investment. It's new, so likely little to no maintenance at first, and probably 10-15 years before more expensive things like the roof, etc. But, that wouldn't allow for a furnished medium term rental, unless I could put a basement suite in each of the side-by-side duplexes, I'd end up with a quadplex in the end, just more money upfront, which is what I was hoping to avoid.

One option is to buy a quadplex in a mid-size city with a college and/or hospital or other large employer or institution nearby. I'd live in one apartment, and rent out the others, one or all of which might be medium term furnished rentals. Or, maybe just a regular one year lease. Some mid size cities have a real urban living experience downtown, but just a few miles out of there, it's totally suburban, so it's hard to classify those types of cities as they are kind of a hybrid.

I'd definitely run the numbers, and I'm willing to consider living in any of those areas: rural, suburban or urban. Whichever makes more sense after running the numbers. And I think most people would appreciate being closer to shopping, transit, major highways, schools, employers, fast, reliable internet, etc. My guess is that people who really want to be in a rural area, like with an acreage, probably prefer to buy, not rent, though both are possible.

In some cases, rural may not be that far from town. For myself, that sounds like something I'd personally enjoy at this point in my life, but maybe not for aging in place (early 50s here). But, if I found a decent property and it cash flows, and doesn't need any significant renovations, I'd consider that too. If it's close to a city, it may be easier to sell if I ever need to, as well as to rent, as it may be just a short 10-20 commute into the nearest major city. I think those may be what people describe as the "sparse suburban" areas. It's also encouraging to see many of you are out of town, or out of state investors which is another option I may consider.

My mother once had a SFH and a quadplex in a small town (5000 people), both probably 1920s buildings, and tried to do it all herself, then used a local Realtor to manage it. She had never-ending frustrations and problems and sold within a few years, at best, she may have broken even. There was not much choice in tenants, most were either low income workers or on social assistance. So yeah, all good reasons to consider a bigger city with a larger pool of prospective tenants, quicker to rent and for more, though it costs more to buy.

Much as I personally like rural areas, I think I'm going to drop it from my short list. Urban and suburban areas have their challenges too, but I think I'd be in a better position to work with that. I want a tenant base of either decent blue or white collar workers and/or (if I do a furnished medium term rental) studious international students who have affluent parents paying their way.

But, in the end, I agree, it's the ROI that should make the decision. I think for me, I should look at suburban and urban areas where the numbers work and the properties cash flow. Maybe even invest out of state and get some suburban Midwest properties.

Great feedback everyone, thanks! I'm coming to a point where I will be selling my current house and using that money to put towards an investment property. If you had asked me a few years ago, or even a year ago, I'd have said hands down, I want to be in a rural area again. As mentioned, I've lived in urban, suburban and rural areas.

Being raised in the suburbs and my mother brainwashing me into believing that the suburbs are best and rural and urban areas are second best, she almost had me believing it. There are pros and cons to all of them. After A LOT of thinking, researching and soul searching, I think for myself, I would choose urban. It will suit my needs better as I get closer to retirement age and in my case, will probably be cheaper than living in a rural area.

From an investment perspective, I can see the point about liquidity. Some rural properties can stay on the market for years, compared to suburban and urban areas which can sell in hours, days, weeks or occasionally months. But, they cost more, but rent for more and more easily. I was considering living on a small acreage and thought maybe I should rent for a year in that area. I was shocked that I could rent a pet-friendly 3 bedroom 2 bathroom house on 10 acres for only $600 a month, however, reliable internet was a concern, and a potential dealbreaker for me and many others. In some suburbs $600 would only be about one week's rent on a smaller house, and in the downtown core, maybe a one bedroom apartment for $2400. I also think HOAs are more prevalent in the suburbs and I'd rather avoid an HOA (unless "I" am the HOA and own the whole building).

I agree, probably easier to find quality tenants, or just tenants in general in the suburbs or the urban downtown areas. As I am thinking of relocating to an area with a lower cost of living, I've been looking at a lot of suburban and urban areas where my money would go further. I've discovered a few urban and suburban cities that look like I could get either a duplex, triplex, quadplex or maybe bigger, for less than my SFH is worth. But, many are indeed 1920s to 1960s or 1970s buildings and I worry about issues with maintenance and repairs, I don't want to be stuck with a money pit.

It seems some of the best values are in certain suburban areas with new construction. As a new investor who is afraid of making mistakes or losing money, I find the idea of a turnkey new build duplex very attractive. About the same price as an older quadplex in some other cities. I suppose if they both ended up cash flowing about the same, I'd like the new build duplex in the suburbs as it will show very well and hopefully not need much major work for about 15 years. Though that means less doors to collect rent from, so if there is a vacancy in a duplex, that's 50% vacancy, and I was planning on living in the other unit. But, it would be more private, though car dependent. 

Wow, so many good points! I think it's safe to say that there are many pros and cons to paying cash as well as with financing. For some people and some circumstances, one will work better than the other.

It's great hearing from some of the more experienced investors and their opinions on paying cash vs financing. For me, I'm afraid if I jump head-first into this and get a 50 unit apartment building and then another one, or even start buying a few SFH each year, that just sounds too overwhelming for me. Some may like the challenge of it, but I wouldn't. However, with some experience, I think I may be comfortable having a few doors, maybe not hundreds, but a few. Unless I come into some amazing money, I wouldn't have enough cash to pay for anything beyond the first building, so financing is likely the way I would acquire subsequent RE investments.

I'd definitely have to make sure the numbers work and that I have a good contingency fund. It's one thing to worry about being able to do maintenance and repairs on my own personal residence, but a whole other thing when I'll be responsible for maintaining the residences of several other people. That's actually one of the things that worries me, but I know if done right, it should be fine, there are many successful real estate investors. That's why I'm not rushing into this, much as I want to start building up my investments.

Vacancies of four to six months is a bit longer than what I thought, but good to use those numbers. If it turns out to be a lower vacancy rate, that's a bonus. As nice as it would be to have it continuously rented, even if it was vacant for six months, if I charged double for the other half of the year it was rented, I'd be even with the rental income I'd have collected if someone had signed a one year lease.

Capital expenditure repairs are something that makes me a bit nervous too, especially since many of these quadplexes seem to be built between 1920 to 1960, give or take. Maybe I should look at a new construction duplex instead? Though that might rent better as a long term rental rather than medium term. I also like the idea of me just having an apartment, so it would be easy to go away for extended periods of time and it wouldn't be as obvious as with a house.

 Sounds good! Even with some vacancy, I think the higher rents would make up for it. Making roughly double would be great, even if it is a bit more work. Another benefit I see is if you get a tenant you really don't like, at least you know they'll be gone in a few months anyways.

I don't see any recent posts on this, so just wondering what people's takes are on buying investment properties in an urban, suburban or rural area. There was some discussion five years ago, but that was pre-pandemic and I'm wondering if that has changed things.

For myself, I've been trying to decide between urban, suburban and rural, and a while ago, after weighing out the pros and cons for me, in my situation, I decided an urban area would be best for me. It was a tough choice and even harder to let go of the comforts of suburbia (I've also lived in a downtown urban area as well as rural in the past, currently in the suburbs). Now that I decided I want to house hack in small, multi-unit building in a walkable urban neighborhood, I feel it's moved me ahead in my investing journey.

Now, that's not to say I wouldn't invest in the suburbs. Ideally, for my house hacking, I'm hoping to find my first building in a downtown area with a very walkable neighborhood in a mid size city with a lower cost of living. But, if the best deal happens to be in the suburbs (or a small town, maybe rural), so be it, as long as the numbers work and there's a good positive cash flow. 

Most of the multi-unit buildings seem to be in older or historic districts and downtown due to zoning bylaws most areas have. I'll most likely end up with a generic, flat roof, red brick quadplex built between 1920 and 1960, give or take. The nice SFH seem to be in the suburbs, but I've seen it the other way around too. Personally, I like the character of older homes, especially mid century modern, but this is all about business, so I'm willing to look at other properties. I have to say, the idea of a new construction SFH or duplex in the suburbs with (hopefully) no maintenance for a while sounds appealing. I don't like the idea of an HOA, I had one once and saw why so many people hated them. HOAs seem to be mostly in the suburbs, occasionally rural areas.

But, for those with a few, or lots of properties, where do you prefer buying and investing? Urban, suburban or rural? And what are the reasons? Maybe better ROI, easier to find quality tenants, maybe the profile of a tenant (family with parents working, driving a respectable car and renting a respectable suburban home), or something else? Or is it just personal preference? I get the impression many of the rentals here are in suburban areas, nothing wrong with that, just wondering why you chose the area or type of property you did?

 This is what I love to hear! I first got turned on to the idea of medium term rentals after watching "Income Property" on HGTV about a decade ago. It almost seemed too good to be true, but there will always be people in need of a furnished place to rent for a few months.

For those who have medium term rentals, what's an average monthly rent, double? Sometimes less or sometimes more than double what it would rent for as an unfurnished long term rental? And what are better areas for this? I'm thinking mid size to larger cities with a college, large hospital, sports teams or some kind of seasonal industry.

I find this attractive, as some of the cities I've been thinking of moving to, and house hacking in a quadplex, are affordable, which is great for buying. But, that also means lower monthly rents, so being able to charge double the rent for a furnished, medium term rental sounds good. Even if there is some vacancy throughout the year, I think I'd still come out ahead. I've got enough furniture to furnish two apartments right now anyways.