All Forum Posts by: Todd Dexheimer

I don't really think the issue is Section 8 vs Market rate. They are both different niches that require different skill sets. You can lose money or make money with either strategy. The real issue to me is that SF rentals just don't make much money and typically lose money. I used to own a hundred 1-4 family rentals and still own 23. I bought these for cheap 2008-2014 prices and have them leveraged at between 15-40% LTV. I cash flow each year, but not by much.

Here is the reality: on paper, they look good, but the reality of the new roof, furnace, water heater, appliances, flooring, sewer line, etc come to fruition and eat that cash flow up for the next 5 years.

You can get lucky with a few of them. I have some homes that have made me $10k+/year for 10 years, but others that lose big money each year.

Now, as I compare neighborhood class, I have to side on the A class and B class side of the coin. Better neighborhoods appreciate faster than bad neighborhoods. Buying in the best neighborhood possible, to still cash flow (on paper at least), will create the most wealth possible.

2 Votes

Philadelphia, Pennsylvania

Quote from @Lucas Thomas:

Quote from @Joe S.:

Quote from @Lucas Thomas:

Quote from @Laura Winters:

You don’t make money on section 8 properties by rental value. You get massive tax credits for participating the affordable housing sector. The beauty is you don’t need to have 100% of your multi-dwelling unit to get this benefit. Depends on the state and city but they usually only require a certain % to participate and they don’t care how you run other portions of the property. Also you get massive credits + funds when you develop these houses. It isn’t making money because you are treating a different beast in a tame way. Section 8 / affordable housing is not something for RE newbie to touch. The people, law, and property are all challenging.

Well that's mostly only for commercial properties. The rest make money cause of normal landlord reasons. Tenants move in. Don't move out. And they let you increase the rent every year without having to figure out if the tenant can afford it. They can cause its government funded. You just have to do the investment right.

LUCAS,
Are you managing these yourself or do you have someone that handles it for you? Also, how many of these kinds of properties do you have if you don’t mind saying? Whereas you raised your hand as a brave soul stating that you are doing well in this class of Property. :)

Well HELLO :D

I'm a subject matter expert in these actually.

I used to own a property management company who specialized in these. I used to run 250 doors of SFH, condos, mobile homes, duplexes, triplexes, Fourplexes, and a few commercial multifamily that all were in war zones. Meth dens are my favorite to buy because people think they "cooked meth" in them which makes them sell for cheap. I have seen every horror story in real estate cause I ran so many doors, it was just an average Tuesday for me. LOL

For management: I do both depending on the state as I own 35 properties in 5 states (Mix of SFH, Condos, Fourplexes, Duplexes, and Triplexes). If its in the Southwest, I manage it myself because it has very little weather and not a lot of external factors that affect the properties. In the Midwest/Northeast, I flew out and interviewed six different managers in each state and I hired the professionalized mom and pop shops that were under a franchises who knows how to run warzones. So you get the corporate infrastructure but with someone who cares about making me money. I do this because the water and weather shifts are too much for me to follow and having to winterize and unwinterize is too much of a hastle.

I'm a Landlord's Landlord.

But don't get discouraged by anything I said. I started out like everyone else. I bought a 5 bedroom house in the "Hood" and rented the rooms out individually to people from Craigslist as a Live-In Landlord. I bought my first crack-head condo for 40k and rented it for 1k a month. And I house-hacked my 1st 4 plex with a VA loan and evicted my upstairs neighbor which is why my standard protocol in my house-hacks is never let ANYONE know your the owner.

What are you winterizing and dewinterizing each year? I live in MN and own thousands of doors in MN, WI, OH, and KY. We don't do winterizing. The furnace needs to be operational and it's best practice to remove the hose from the outdoor fixture, but other than that what are they charging you for?

0 Votes

Philadelphia, Pennsylvania

This answer depends a bit on your age, your risk tolerance, and a few other factors. If you are young, more risk is appropriate.

If you're in your 20's and 30's, then go ahead and invest all $120k.

If you're in your 40's and above, be more cautious. Do you have only $120,000 to invest? Or do you have a large retirement account already set up?

As for your first question, if you don't want to spend time in the business, then invest passively - either via syndication, debt fund, or a REIT. Don't expect to buy something on your own and not put time and effort into it. Buying a few rentals may not be a 40 hour job, but it will be a 2nd job. Some weeks it will be no work, but others it will be 5-10+ hours, even with hiring a PM.

If you're willing to put in the time and effort needed - especially on the front end, then buy the rental or do a few flips.

0 Votes

Quote from @Chris Seveney:

Quote from @Spencer Cuello:

Has anyone worked with a multi family syndication company they would recommend? I'm looking for minimum investment sizes on the lower end to start.

I would check out passive pockets as well as the ask about a real estate company or syndication and passive investing forums. MF has seen some significant changes and people recommended precovid may not be recommended now, so be careful.

One person I always had a lot of respect for was @Todd Dexheimer who runs a great company and is very knowledgeable (full disclosure not an investor but have met him several times).

Also a question will be "what is lower end" starting investment.

Thank you Chris and @Arn Cenedella. Both of these guys are also great guys and have excellent track records in the industry. Chris would give you diversification outside of MF.

2 Votes

Quote from @Christopher G Bogle:

Considering fix n Flip around Tampa but found Holdfolio and others. Invested $40 k there. Considering 200K more in syndication vs fix n flip. Any thoughts?

Well, those couldn't be more different. Fix & Flip is very active, and most would say it's not real estate investing. Investing in syndications is very passive after you find the right sponsors. I'm biased toward investing in syndications since my company Endurus Capital is a syndicator. I have, however, flipped over 100 homes and know the pros and cons of flipping.

One thing to consider with flipping is that you can take the profits from the flip and invest them passively. Flipping is high risk and high reward. It takes a lot of planning and hands-on dedication to create real profit.

0 Votes

Tampa, Florida

I love this approach. When I was flipping, I took my profits and bought rental homes. Need to keep that cash moving!

0 Votes

Quote from @Chris Seveney:

Quote from @Kris Marmol:

Hello everyone,
I hope this is the right area to post this. My team and I are in the process of structuring a few deals that we will be looking to raise capital for. There doesn’t seem to be many local meet ups in my area so I am looking for any other suggestions on how to connect with other investors or find passive investors for our projects. Can anyone recommend any good conferences to attend or ways to find more equity partners?

Passive investors are typically not at conferences either. It is either from people you know or marketing and advertising. Expect the first $1M to be easier then it slow down but assume a 10% marketing budget - meaning it will cost $100k for every $1M you raise early on after that first $1M

Chris, do or or have you spent money on marketing for investors? We've raised about $100mm and haven't spent money on advertising to get investors. I've been curious if it's something that people are having success with.

0 Votes

Quote from @John Lasher:

Hey everyone,

I've completed a few flips, but have always heard that larger multifamily deals is where most people gravitate towards. It does seem very interesting (and lucrative), but also overwhelming!

I'm exploring a few mentoring programs out there. Some are between $20k - $30k. Has anyone had experience with coaching? Was it worth it?

Thanks!

Coaching is a great option if you're looking to take action quickly. Only enroll in coaching if you've read a handful of multifamily investing books that has given you a baseline. Make sure you are highly dedicated and motivated to take action. A coach won't do it for you, so you need to be sure you fully understand what you're looking to achieve and have the time and energy to get the results. I'd be happy to discuss our mentorship or point you in the right direction.

1 Vote

Quote from @Alan F.:

Quote from @Jay Hinrichs:

Quote from @Shiloh Lundahl:

@V.G Jason that wasn’t my experience. I knew of a lot of people that were investing between 2010 to 2017. The math for investing was pretty obvious to everybody that it would be hard to lose money by buying a home for 50% to 70% of the rebuild cost. But then as the home prices kept going up, they decided to get out of the market, thinking that there would either be another crash or home prices had gotten too high at that point. They then missed out on several more years of growth because they got out of the game and waited on the sidelines for things to look better.

2010 to 2012 was the period that cash investors were the players or those with IRA keep in mind investor loans were still basically non existent in those years for all those expect very well to do Investors beginners were not getting investor loans.

Myself I thought about 2017 was going to be kind of the end of the 10 year cycle and I actually put a presentation together called the Pivot looking at alternative ways to invest in RE. I missed that one.. But I kept doing what I have always done did not quit but thought things would change.

As for 2023 and 2024 those were by far the best years of my career.. And 25 is going to be just as good.. WE create value so different bizz model and my capital partners ( I provide the capital) have done equally well in value add.. in my mind what slowed was the vanilla rental real estate bizz.. we all know that rates rose higher than rent.. so cash flow got squeezed .. Also keep in mind when I started funding investment rentals in 2002 for CA investors 100.00 a month cash flow was the goal and accepted.. and even break even or a little negative was fully acceptable in markets with historic appreciation..

RE is always changing and if you have only one niche then well your limited in opportunities and subject to the conditions that exist at the time for that strategy.

I think you brought up a great point with the 10 yr cycle. I know it's not necessarily clad in stone but things are certainly different.

Everyone; what's your take on the 10yr cycle and where we are?

I'm not trying to time the market. ..just interested in people's opinions

The real estate market is a 17-18 year cycle. It's been like that in the US for a long time. Peak was 2006 and this peak was 2023, so this one was 16.5-17 years. Expect a 4-5 year down/flat market before a slow climb up.

1 Vote

Quote from @Henry Clark:

As I think about this post on Coaching. I think BP would create more value to the RE community by doing for coaching what they are doing for LP syndication investors.

I personally don’t see LP syndication investors as Real Estate investors. View them as bankers who better know how to do due diligence.

Whereas as a Coach segment would provide far more support for new REI people to find resources that fit their needs. BRRRR, Fix Flip, taxes, deal analysis, market analysis, marketing, financing, etc.

Realize BP has a boot camp program but don't know what that entails. But opening up vetted Coach programs would supply a lot more bandwidth to the REI community. Plus different approaches versus one size fits all.

In my opinion LP investors are the definition of a Real Estate Investor. They invest in real estate passively. They don't buy it and operate it. Myself and the majority of people on BP that call themselves real estate investors, should be calling themselves real estate business owners. Unless you're taking a passive role, you're buying/building businesses that require work and dedication.

1 Vote

All Forum Posts by: Todd Dexheimer

Todd Dexheimer has started 32 posts and replied 2962 times.

Post: Why Class D/Section 8 returns are not as good in Real Life vs on Paper - Real example

Post: Why Class D/Section 8 returns are not as good in Real Life vs on Paper - Real example

Post: Syndication vs Investment propery

Post: High Quality Syndication Companies

Post: Looking for do's and dont's for syndication investing

Post: I fix and flip properties to reinvest in syndications.

Post: Where to find equity partners

Post: Coaching for multifamily?

Post: Those of you on the sidelines

Post: Pros and Cons of Joining a Coaching Program