Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
So I've been looking at SFR and multi's in my area and I've been coming to the conclusion that multi's may be the better option (under certain circumstances) in my area.
My current property I've found is a 4 unit with est gross rents of 2450-2650 per mo. purchase price of 85k, repair est of 20k, with arv of 215-225k. Seems pretty good from my rough estimates.
But how does one jump into a multi as a first rental without loosing their shirt. I've got 40k in reserves, good credit, 2 OO rehabs under my belt and 4 wholesales, but the prospect of rentals intimidates me for some reason. I guess its the idea of sitting on it vacant while fixing, and while trying to rent.
What can I do to increase success, and minimize faillure and profit loss in order to jump into this situation.
Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
17y
Terry -
If those numbers are right, why not put one under contract and wholesale it to a landlord. Or if there is a market, fix and flip the 4-unit to a possible owner-occupant, or investor.
This will put additional cash in your pocket and help you gain experience. Most of my wholesale buyers, buy for rentals.
We did a very similar project with a SFH and duplex on the same lot, wholesaled it and it was one of our most profitable deals.
Real Estate Investor · Baltimore, MD · Member since 2008 · 619 posts · 75 votes
17y
cucaloco
I am considering wholesaling this property. However, I also want to buy and hold myself.
I would rather wholesale the prop as-is, rather than buying, fixing, and selling. If I am going to go through the trouble of fixing, I would rather just hold it.
Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
17y
If you are going to fix and hold you may find a lot of willing tennants from your local fast food chains. They are usually populated with employees who are ready for their first place. If the rent per unit is reasonable you could land long-term tennants who will almost do anything to be able to keep their first place away from the parents.
And they do not expect a whole lot of amenities most of the time.
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
17y
Terry,
I have found one of the most important elements of multi-family units is to have separate utilities.
That what you do not pay for, you do not value!
Also, I have found that a property manager makes life much better and well worth their commission.
Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
17y
And that chris brings into play one of the downfalls of the "kids". And reminds me of a unit which had separate utilities, but for some reason the baseboard floor heaters were all ran off the main unit's meter. So you will want someone to verify that the electric was properly split while you are doing those repairs.
Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
17y
Terry,
Success in the rental business involves exactly the same elements as success in any other business; including wholesaling, rehabbing, farming, running an auto company, running a fortune 500 business, etc, etc, etc. It's all the same!
The keys to success are:
1. Understand the basics of the business
2. Understand the numbers (especially operating expenses)
3. Do your due diligence
4. WORK HARD
5. BE PERSISTENT