What to Look For and What to Ask for
Hartford, WI · Member since 2016 · 162 posts · 50 votes
Hey BP community!
I am hoping in the next week to go out and look at a few properties. I have found them from various resources ie, agent, zillow, redfin, ect. So my first question is, from the online listings not everything is always there, so what information is key to ask for (for multifamily anything from a duplex to a 10 unit building)? My second question, is when I go out and look at these properties what should I be looking for?
Thanks!
With no experience start small and go through the process first.
On multiple units there is a lot to consider and first look at price, condition, up or down market and your own credit situation.
If you have not rented to anyone yet, you do not want to learn the hard way. People stop paying and then what...if you are close or short on cash, you could go down fast. Start slow there are so many problems with multi-units.
I flipped 35 houses and would never do an apartment ...never. Way to much work and problems.
Best case scenario : Find distress house and buy at 55% of fair market value....maybe 20% fix up and carrying costs and hope for 25% profit or less.
But avoid junkers, heavy damage, roof problems, furnace problems, etc. Keep it simple....some paint, carpet, appliances and yard work.
There are so many distress situations that the junkers are out of the question. Keep it simple.
I made to many mistakes...so now I only will get an obvious good deal at about 50% and no major work....work should get done in two or three weeks and put up a for sale the second you close....for .99 cents you can get a for sale by owner and you will see the neighbors will be your best buyers...even though the house may have been for sale for a year or more.
Once the neighbors see the house sold...then they want it...they say...darn...I should have bought it....so jack up the ask about $25K over what you paid and just fix the yard and paint the front of the house and clean up the mess inside and see what happens. Many people will say..stop fixing...I'll take it and finish it up.
Oh...and never rent to anyone ever....just flip and move on....renting is a real nightmare believe me. You can have ten houses and one bad renter who doesn't pay and maybe 4 that are always late....end of dream...nightmare stuff. You will be paying their house payment just to keep current. When they don't pay for two or three months and then y ou go to court...another few months....4 to 6 months of no rent....how does that sound....pure misery for sure!
Fast and easy....do this an love it....screw the multi units. PH
Find a good blue collar neighborhood (C class) that has hard working people, maybe a rodeo and a lot of big trucks and that will be the area where cash flowing properties will be plentiful. Hopefully, you have an area like that 30-40 minutes from your house. That's what I did in San Diego. I got the best bang (cash flow) for my buck and I did not feel unsafe going in to collect rent, do move ins and move outs, or show the property to prospective tenants.
That's how I got my feet wet. Then, like magic I bought 10 total rental condos, had $50,000 in cash flow rolling in and then appreciation happened and those rental condos doubled. Don't discredit condos or townhomes. They were gold mines for me. I 1031 exchanged them for apartment complexes 5-7 years later and I know have 122 front doors and current $160,000 cash flow. I did that one little rental property at a time.
You will do it!!!
Swanny