All Forum Posts by: Brandon Schlichter

I've done well with BRRR over the past 4+ years. Started off with $30k, used that money to leverage private money a little beyond what i started off with.

Sitting at 72 units now, only buying SFDs , duplexes and small apartments. Don't own anything over a 5plex at this point and so far its worked great for me. Not sure where I'd suggest getting deals at in Columbus at this point, but really anything is possible if you set your expectations right and are ok with long-term growth over short-term gain.

Man I hope I  remember to go.

@Shaun Stephens ?

One thing I consider is this : 

20% NOI on a $5mm investment = $1mm/yr

7% NOI on $5mm investment = $350k/yr

The $650k difference would be more than enough to justify hiring management, work, etc. I realize capex/maintenance would be higher, likely higher turnover if you're buying dumpier properties, etc. But still if you take it down to only 15% true NOI, it's still a difference of $400k.

I've got about 20 solid properties that make sense as investments, finding properties has never been the problem for me, the problem has been having funding to buy them.

I've considered the issue with selling properties however from what I see large multi-families are almost exclusively in the realm of hedge funds and out-of-state buyers. Smaller properties sell to locals. While selling 200 at one time wouldn't be possible (And would likely crash the market), they could be sold off a few a month (Granted taking forever to sell. The ALTERNATIVE is that if I make an efficient company, with managers in place I could potentially just package things up and sell them as turnkey investments. If ROI yields are double what one would see as compared to large multi-families, I would THINK they would be quite sell-able and not effect the market as a whole.

Just a natural result of growth and targeting properties I like. Early on I mostly bought foreclosures off the MLS, anymore it's all SOI and facebook (Not getting facebook ads, just people contacting me personally or my business page on there).

I started this phase in 2013, mostly financing via private lenders/partnerships with SOME bank money in there. 

$18K or so per UNIT on my non-SFD, my SFDs run about $25k purchase with $7.5k in rehab per house, apartment units are around $5k/each.

@Andrew Syrios Thanks for the input.

I'm not saying that large multi-families are a bad strategy (Obviously they're good for availability). More than anything I'm trying to figure out what the roadblocks will be at 100-150 units compared to what I see at 71 units. 

We just got appfolio and are in the final stages of setting it up.

I already have a maintenance guy onhand (And have since day #1). As I get more I'm planning on assistants and book keepers for when my automation isn't enough.

Cap rates on larger multi-families around here are around 7%, cap rates on SFD and Duplexes are near 20%. That's a pretty dramatic spread, especially if you look at large multi-family only appreciating 1-2% and SFDs (Not so much duplexes) getting a solid 5%-6% a year for the past 3-4 years. 

Not a single management company I can trust in my area, might as well just make my own. I'm bringing in enough money to build one, could even subsidize all the employees through outside management. But if I keep growing there's no need for outside property 

So, for the past 3 years or so I've been mentioning to a FEW established investors that I'd like to have at LEAST 100 SFD & 2-4 unit rentals before I consider buying an apartment complex, commercial, etc.  The goal being to have 200 before I start really doing commercial on a serious basis.

When I mention this, the response is usually "You don't want that many, you should stop at 30-40 units, convert them to Commercial or a large apartment complex" usually due to management & cashflow issues.

So, as of this time I'm right at 67 rentals with another 4 in contract. Looking at a few more purchases this year that might put me to the 75-80 rental range.

And at this point I'm trying to figure out - What's the problem with SFD & 2-4 units?

As of today I manage it all myself. I do utilize work crews for all my maintenance work (Because regardless of what I do, I'll never be able to scale without outsourcing at least this). I could see myself easily keeping it all a one-man-show at 150 units before I have to consider management as long as my workload scales linearly. My expectation after I bought my first rental was that my workload would scale in a linear fashion, and more-or-less it has. As time goes on I keep getting more efficient at how I manage it all. By tracking expenses with QuickBooks, I've been able to find where I was leaking cash (Mostly dealing with how I managed tenant utilities) but also decrease my hours spent per rental, per month. 

So, for those more experienced, what am I missing? I realize that taking on someone to help manage at 150 units will mean employment taxes, training, and a increased workload most likely at a somewhat lower cashflow per unit due to the increased expenses, but it would let me scale beyond the 150 unit threshold to whatever I deem useful. This is what I'd LIKE to do, seeing as I'm 31 years old and there just seems to be too few people wanting to 'do the landlord thing' and constantly buy property. Most of the people that were hot on buying 3,4,5 years ago have slowed down significantly as prices have gone up, but I've been able to increase my speed of purchasing due to a larger sphere of influence and organic marketing. 

I'm in a small town, made tons of lowball offers for 5 years now. I can't keep up with all the people calling me asking me to buy their property. The big thing is whether or not people take your offer. If they do, then you're gonna have a track record of success and being 'the guy' that buys property. An alternative would be ask for seller financing (Even partial financing) to hit your cap rate goal while putting a carrot in front of a seller for a slightly higher price. I've got a 50% cap rate deal this way.