All Forum Posts by: Michael Bishop

6. Along the lines of (2), invest as a passive investor in an apartment syndication. You could spread that amount over up to 20 deals to mitigate risks even further. It's not uncommon for these teams to target an equity multiple of 2.0+ on a <10 year hold. That's double your money in less than a decade!! Not to mention a monthly or quarterly cash flow distribution with minimal to no effort. Here's something to read and think about:

https://www.biggerpockets.com/blogs/10191/66365-8-...

Good luck if this is your situation, it'll surely be a fun ride. Let us know what route you choose!

I can't speak much to the rental market as I haven't studied it much (only gained interest in real estate after moving to TX). That being said, I grew up in Crown Point, IN (right next to Mville) and would be very careful with tenant quality. It is in close proximity to Insbrook Country club though, which gives me a bit more comfort (used to work their and my family are members).

Have you thought about taking a more passive approach? There are syndication teams all throughout the country with the opposite problem; plenty of deals and not enough capital.

These teams often have seasoned veterans running them who have long lasting relationships with brokers and get first pickings on deals before they hit the market.

If you like the process - finding the property, negotiating the deal, due diligence, re-positioning the property, daily management, etc. - syndications are surely not for you. On the other hand, if you like the idea of investing in a deal, market, and team that you believe in and sitting back and collecting checks, syndication might be right up your ally.

Check out my blog on why apartment syndication rocks:

https://www.biggerpockets.com/blogs/10191/66365-8-...

Keep us updated on your strategy!

Hi @Fami Fozi, depending on your situation and interest level, MF syndications could be right up your ally.

1. Syndication teams always have a property management team on board with a successful track record in the specific market.

2. As an investor in most MF syndicates, it doesn't get much more passive.

3. Depending on your capital, you could easily find a team that does multiple deals per year and spread your capital out over each deal to minimize risk even further.

4. 10% CoC is a common target.

5. Hold periods for these deals typically don't go as long as a decade.

The one caveat is that you have to be an accredited investor. Feel free to connect, I'd love to chat.

Best of luck in whichever route you choose to take!

Travis, that all depends on your level of involvement and whether you're interested in doing small MF with one or two investors, or whether you're interested in larger MF as a passive investor.

When it comes to the ladder, I'd say there are less risks due to economies of scale and other things:

1. Maintenance and other expenses can be marginally reduced based off of a discounted rate for a higher number of units.

2. Vacancy costs are far less risky. With a SFH, if a tenant leaves unexpectedly, you're left covering the mortgage. In a 100 unit MFH, if three tenants up and leave, you've still got 97 other rents covering their portion.

3. A number of studies have shown that MFH (large MFH in particular) are MUCH more recession-resistant than SFHs.

These are just a couple of thoughts that pop in to my head immediately. If you'd like to discuss the topic further, feel free to connect!

Depending on how involved you want to be, larger multi-families also lend well to more passive roles. Also I second what David said, scale is a huge factor to consider.

As William said, some municipalities do not allow it, so first check with your provider. To your question; in theory, you could bill the entire cost to tenants. If you're in the right situation to implement a RUBS system, it's an awesome way to decrease expenses, thus driving up NOI and FMV.

I agree 100% with @David Thompson.

That being said, since your question is "How should I invest 200K?"and nothing about real estate, I'm going to move away from real estate and make a different suggestion - look at low cost index funds that hold all S&P 500 companies. Mutual funds tend to have much higher fees that index funds. Studies have shown that two investors, starting at a young age, both with $100K to invest, the only difference being that one investor pays 1% in fees while the other pays 2% in fees, could be the difference of 10 years worth of retirement income!!!

VFINX and VOO are popular ones among the worlds elite financial experts, check them out.

Disclaimer: I'm not a financial advisor :)

@Jeff Lulek, you mentioned eventually buying an apartment building but that it is a ways off. Have you considered syndication and joining the team as a passive investor/limited partner? It sounds like you meet the SECs requirements to be classified as an accredited investor. Depending on how involved you want to be (this route is absolutely more passive), it's definitely something to consider. Check out my blog on why apartment syndication is an appealing investment vehicle. Number 7 touches on some tax benefits, although it is by no means all inclusive.

https://www.biggerpockets.com/blogs/10191/66365-8-...

Best of luck!

I think you can draw on past experiences here; when you spoke of flipping vehicles, you said "Have become very skilled in many ways at this since I am very handy and learned from a mentor from a massive privately owned dealership that a family friend owns.." You attribute being successful to having a mentor.

In real estate, perhaps more than other industries, learning from people who have done deals (successfully) is hugely beneficial. In my opinion, keep your secure job (for now) and use all of your free time to network, soak up knowledge, gain a mentor, etc that you possibly can until you have the capital for your first deal. The list that @Zachery Buffin provided is an awesome starting point.

Good luck and welcome to BP!