All Forum Posts by: Chris Coleman

@Ruslan Kotelyanets

Start by getting educated on real estate investing. I would not buy anything, especially not a million dollars worth, until you learn, learn, learn.

Yes, real estate investing is definitely a “learn-by-doing” sport. And yes, you’ll learn a ton on your first deal. However, you should ready, study, research here on BiggerPockets, talk to experienced investors, and learn, learn, learn before making that big of an investment.

And this is especially true for multifamily real estate. Diving in to multiple units right from the start is fine, and it’s actually probably recommend by a lot of experienced investors these days. But get educated on multifamily investing first.

@Quinton Huntley

For cash flow real estate investing, the holy grail is Class C properties in Class B neighborhoods.

Class B properties can also cash flow well, as long as you don’t overpay for them.

It’s recommended to stay away from Class D, unless you really have experience in that niche (...and combat training).

And Class A properties can be an appreciation play, but tend to yield considerably less cash flow compared to the others.

@Nicholas Daniels

If the property was rehabbed within the last 5-7 years so that there should be no major deferred maintenance issues, then you can generally go with 10% for maintenance and vacancy.

Older properties will tend to have more issues and thus warrant more.

@Steven Cowles

And if being a landlord is actually what scares you, there appears to be plenty of margin there to hire a good PM if you need, and still make a good return.

@Steven Cowles

Without knowing your Debt Service, it looks like you’ll be cash flowing about $35K - $40K per year, with about $80K all in. Is that what your numbers show? If so, the numbers look very good.

But do your due diligence to verify this. Review the most recent financials - profit/loss - to make sure your not missing any operating expenses. And again, review the rent rolls to make sure that the 100% occupancy and $650/door are accurate and legit and not puffed up in any way.

Review your market. What are comparable rents? Is it a growing rental market? Will you be able to replace vacating tenants fairly easily?

Having completed 12 flips, you’re no doubt very keen on the building construction, rehab, maintenance, etc.

Finally, consider you exit strategy. $10K is not much in way of forced appreciation, so you’ll be relying largely on market appreciation. Will you be able to sell at a profit when you’re ready?

@Steven Cowles

More info needed.

Is the property stabilized so that you will be cash flowing the $650 per door from Day 1?

Are you paying cash or financing? If financing, what are your terms?

What are your Closing Costs?

What is the Cap Rate?

Will you self manage or hire a property manager?

Have you reviewed the Rent Rolls? Are the Tenants mostly actually paying on time?

Can you and will you be increasing rents once the upgrades are complete?

Are there other sources of income from the property in addition to rents that are being considered (e.g., laundry facilities)?

@Justin Delahoyde

When choosing real estate investing markets, it’s better to go with major metro cities, or secondary markets that have the following characteristics:

1. Growing population

2. Growing employment

3. Diversity of industries and multiple major employers

4. Low rental vacancies

5. Steadily rising rental rates

6. Landlord friendly

In simple terms, you want to invest in cities where people want to live, have good jobs, good job options, and are renting.

Check out reports like Marcus & Millichap and Yardi Matrix. These provide updated lists of the best performing markets for various types of real estate, with good info. Some of the more recent growing markets include Charlotte, NC, Phoenix, AZ, and Houston, TX.

@Justin D.

It really comes down to how passive or active you want to be going forward.

From your experience, you already know how active it is to own single-family rentals. If you enjoy such active investing, then more SFR's may be a good decision.

However, if you’re ready to become more passive...that is, pretty much completely passive, then syndications are probably the way to go. In syndications, you are completely passive. You have no management decisions, no contact with tenants or property management, no working with brokers or lenders, etc. That is all the responsibility of the Sponsor.

@Wes Talbot glad to hear the GRID was worth it for you!

@Scott Blackwill

I started in SFRs, and after about 4 years of building a SFR portfolio, then went into multifamily syndications as a LP. Now I am in the process of being the GC on multifamily investments.

My goals were very similar to yours. I wanted to build long term asset value while collecting cash flow. I wanted to own the assets, so that it added net worth and provided the option for leverage and scale. So I did this early on with SFRs and I can say that it has worked well.

Then, when I decided to get into large multifamily, I started by investing as an LP in syndications so I could learn and make money at the same time. As others have said, you can scale, even as an LP, if you invest in Value-Add deals where equity growth is forced and you reinvest. And you do actually own part of the equity in the deal, which is an asset.

One thing to note, most multifamily syndications require that you be an accredited investor to be an LP. As such, it may not even be an option unless or until you meet those requirements.