All Forum Posts by: James W.

I've been through this with an 8plex I recently acquired. Several of the tenants were below market, but repairs were also in arrears. I've started on a 3 year upgrade project, starting with "clean it up" and then "make it nice". I would also ask the tenant if there are any unsolved issues that he/she has with the place. The other thing to remember is that you may be better off being 10-15% under market in the first year to avoid vacancy while you "learn" the property, and then make the real rent move in year 2. 

I had a duplex next door to a college in Texas for about 10 years. I found that (a) students were fine (b) if you didn't have it filled by early June, it wouldn't be filled at all, or at least not at a good return level and (c) you should have each person living there AND their parents co-sign. Never had any party issues, but think it's worth talking about at the beginning.

Parking can also be a real issue with a shared house situation, so we specified how many places were included in the deal. 

Finally, I had turnover every year, which usually meant some degree of vacancy. I'm not opposed to doing it, just would be careful about it--my typical turnover in this area is usually more after 30-40 months.

I started with a duplex and have focused on 2-4 unit opportunities in my portfolio for a couple of reasons.

1-Fannie mae loans on these sort of properties were very competitive, even for investment properties. I have 8 loans at under 5% with 30 year locked rates. 

2-In Texas, I could find cash flowing duplexes for relatively low amounts of money down--20K or so for the one I started with. In DFW, there seem not to be much in the way of cash flow at that price any more. 

3-I didn't know about Fannie Mae small loans at the time. Knowing what I know now, when I was aggressively expanding my portfolio one year, I might have just gone after one commercial building instead. 

I've also done some passive deals as an LP. Those work out well until they don't--as an LP, if the GP decides to screw you there are means of recourse, but they are expensive. 

Good luck!

I've had good luck with JIm Glynn who focuses on cash flow friendly properties. http://investdfw.blogspot.com/ 

Thanks @Lane Kawaoka. I suspect I'll keep most of these on the Single Fannies at 4 and change, and start shopping at the higher end of the market. 

@Mark Allen @Mike Dymski Thanks for your follow up on my question--I had checked on Fannie Mae's site but couldn't find it. I have multiple sets of contiguous properties, and the headache of dealing with SWBC/Cenlar's servicing operations has made me reconsider keeping the 10 loans I've got. The contiguous properties, though, don't qualify for the 750K minimum debt on Fannie Mae's, so I guess I'll just keep them as is.

@Mark Allen Is that usually for portfolio sales or other cases?

Howdy Folks,

I have 25 doors split across duplexes and a single property 8 plex. Is it possible to get a "small" fannie mae loan for the portfolio or do I need to go to someone for portfolio lending? Right now, all all of the duplexes are on FNM conforming loans, so 30 fixed at great interest rates, and so moving is not highly incentivized. Would like to hear from any of you with experience financing portfolios/multifamily properties in buy and hold situations.

Just my 2 cents...but it looks like you are mixing the "place to live" with "good investment" sort of thing. If you want to live there, great, go rent a place....but don't leverage up and buy a MF with a large negative cash flow. 30K/year is a pretty big drain, and you can get a lot of house for that in most places...

I would have a look at the tax appraisals in the neighborhood for something that has turned over recently--they will usually appraise land separately from structure, and that can give you a feel for the right ratio. Appraised value is a different question, though.

@Arnie Abramson I'm interested in hearing more about what you and your team does. Can you PM me with more details?