All Forum Posts by: Illya Kravchenko

@Illya Kravchenko

It's great to hear that you've been saving capital and educating yourself about real estate. Choosing a specific goal or strategy can indeed be challenging, but it's a crucial step to focus your efforts and resources. Let's break down a few considerations:

A popular tactic is to invest in properties outside of your state, particularly if your investing objectives conflict with the state's market circumstances. Researching and managing properties from a distance is made simpler by technology and internet tools.

Real estate for business and residential purposes differs. Unlike residential properties like duplexes, commercial assets like 8-unit rentals frequently call for a different strategy when it comes to finance, management, and tenant relations.

Examine carefully the markets that correspond with your investing objectives when considering out-of-state possibilities. Take demographic changes, job growth, and economic stability into consideration. A key component of success is assembling a local team that handles property management.

If you're new to investing, even if the property is out of state, start with a modest residential property. A modest multifamily building or duplex may provide you invaluable experience and aid in your comprehension of the ins and outs of real estate investing.

Maintain your online and offline networks with seasoned investors. Join forums, go to real estate meetups, and ask people who have been through similar experiences before for guidance.

Seek guidance from a real estate specialist, such an investment adviser or real estate agent, to provide tailored guidance that aligns with your financial objectives and circumstances.

Remember that real estate investing is a journey, and it's okay to start small and gradually scale your portfolio as you gain experience and confidence. Stay focused on your goals, and don't hesitate to adjust your strategy based on what you learn along the way.

Welcome to the forums @Illya Kravchenko and congrats on the first post! There are thousands of out of state investors who purchase in Memphis because the price points are a lot easier and the laws are landlord friendly. If you have any questions don't hesitate to reach out, be happy to walk you through the ins/outs of the process and market in general. Best of luck on the journey! 

How much experience with rentals do you have?

Jumping into an OOS 8-unit can be risky. If it doesn't go right you could lose everything. 

Might be better to try an OOS  1-4 family first and rack up some experience. 

Then, move into bigger things.

@Illya Kravchenko I have several smaller MFH 2-4 units and now two 5-8 units. The 8 unit definitely has come with a larger learning curve than the smaller unit buildings. To be fair it had been improperly managed for about 10 years prior to me buying it and so the existing tenants were not getting any maintenance work done and were therefore paying 1/2 the going rate for rents.

I know it’s a crap shoot for the type of management you’ll be getting when you buy a building and there’s no way to know if a smaller or bigger building will be better.

I think the thing to remember is that housing rentals are a customer service business and sometimes you’ll have to spend more time with one building than another.

I think with 8 units you have more income cushion if you have a vacancy or an expense like an HVAC issue. While I’ll still buy smaller number of unit buildings if the math makes sense I’d prefer to focus on the larger ones now that I’m doing them because I think they’re easier. I think you’ll find they are too.

If you have good credit above 740 and have 25%-30% to put down it's really not a difficult loan process. 8 Units typically will offer a 1.25% DSCR ratio which is required in most cases but the approval is going to be based on the rents. Buying out of state is fine you will only have an issue if you go with a lender with overlays or requires landlord seasoning.

They may question your ability to manage the property if you are out of state in terms of excessive mileage away. The fact that you travel for line work could satisfy a the UW's concerns or supply a letter of explanation.