Investors Who Buy Multiple Rental Properties

For the past two years I’ve been working with a number of individual investors who have each purchased multiple properties each year in the North Metro Atlanta region.

Repeat Buyer Investors

Some of these investors have bought about 5, 10 or 15 properties each year. A few other investors have bought between 10 and 20 properties each year.

They are all on track for continuing to purchase properties at their current rate over the next few years.

The properties that have been purchased by these investors are rentals that my company manages.

The process of doing repeat deals on behalf of this group of investors has enabled me to gain valuable insight into how each of them approach investment property. Each one has their own expectation for getting a minimal return on their investment.

All this activity has created a solid foundation for understanding all the various factors involved in helping investors find and acquire deals that match their investment criteria.

Cash Buyer Investors

I’ve noticed a certain pattern within this group of investors in terms of how they buy their properties. Those who buy the most properties, at the fastest acquisition rate each year are cash buyer investors. In other words, the buyers in this group who acquire 10 or more properties each year are those who are using cash.

Loan Buyer Investors

The investors who are buying 10 or fewer properties each year all seem to be taking out an investment loan for each purchase. The loans are usually conventional loans, not hard money loans.

Other Buyer Opportunities

Now I’ve been thinking about other investors not in this group who I have met here and there over the years.

They are those investors who buy 10 or more properties a year and leverage their cash reserves with the use of investment loans. Some are using the cash in a self-directed IRA and leveraging it with an investment loan.

I think there are a number of investors in my group of buyers mentioned above who would benefit greatly by leveraging their buying power with a combination of loans and use of their retirement funds

Self-Directed IRA and Investment Loan Example

By running some quick numbers I calculated that an investor with about $500,000 in a self-directed IRA retirement account would be able to be in the group of buyers who acquire about 20 rental properties in a year.

This example assumes having access to a conventional investment loan that requires no more than 20% down and getting all into a single family rental house for $125,000.

Of course the numbers would change up or down depending on the down payment required for a loan and if the investor buyer decides to go for multi-family units which can be acquired at a much lower price per unit than a single family house.