Hi All! First Time Investor Interested in Multifamily Units

15 Replies

Hello everyone, glad to be a part of BP, seems to be a gold mine of valuable information and helpful people!

First time investor, 25, I've been researching out of state markets for buy and hold rentals (I live in NY), and some clarification/direction as to which markets some other investors have had good returns/cash flow from, not looking for a flip, or even necessarily vast appreciation, I have some investments, which are nice to have but I'd like to move some of that into rental properties to have more effective cash flow. 

Some of the markets I've been considering are St. Louis and Cleveland, some very affordable multifamily buildings available, I'm also considering single family/young couple oriented houses in the Durham/Charlotte/Raleigh areas, Columbus OH. My dollar will go much further in these markets than the NYC/NJ area, and from what I've seen there's better potential for growth in these areas than in, say, most of Pennsylvania/Connecticut.

I'm looking to spend anywhere between 40k-130k, and I'll bullet some points of concern I have that my research has fallen short on/I'd like some experienced insight on

  • High crime areas: I've gotten mixed ideas about how to handle these, and what they mean for stable rental income. Is it more the amount of crime that negatively affects buying? or the type of crime? Does adding increased security measures to my property (i.e. security cams, code locks, etc.) make renting more attractive/profitable?
  • Population Migration/Employment Data: St. Louis/Cleveland have had steadily declining populations, any investors with holdings in these areas have comments or thoughts on this and its effect on the local areas? Again I'm not looking to swoop in and hike rent up exorbitantly but if I'm going to be forced to lower rent over time that's something to consider.
  • Tenant Screening in Low Income Areas: Have any investors been able to hang on to quality, long term tenants? And if so, are you the anomaly or is it relatively simple to do so with some diligence and research?

Thanks for your insight!

Hey John! There are quality tenants in every neighborhood the problem is finding them! Set up screening standards and follow them. When you get a good tenants provide good customer service. Fix things promptly, respond to calls, and respect their privacy. Provide a place you would want to live is the best advice I could offer whether you invest in A or C class neighborhood!

Originally posted by @Ian Tvardovskaya :

Hey John! There are quality tenants in every neighborhood the problem is finding them! Set up screening standards and follow them. When you get a good tenants provide good customer service. Fix things promptly, respond to calls, and respect their privacy. Provide a place you would want to live is the best advice I could offer whether you invest in A or C class neighborhood!

 Thanks for the advice! I was definitely planning on being as active as I can with that aspect, along with quality property management

Originally posted by @Paul Choi :

St Louis population has been on the decline for years.  I would look else where.  It would take a great amount of stimulus to get that trend reversed.

http://worldpopulationreview.com/us-cities/st-loui...

Thanks, that's some solid data. I've seen people talking about really good ROI in St. Louis and similar areas, but I don't like those numbers for long term

Originally posted by @Arthur Soto :

Can you even find a quality MFH for 40-100k? I am just curious. I am all new to this bud budgetin between 100-160ish for my first investment.

 I've seen a few, they seem to be in higher risk areas and in some type of dilapidated state, hence my hesitance. Duplexes for that range are more common than 3+ unit structures, but they're out there. 

@John Conte Congrats on taking the steps towards investing in RE early in life! In terms of the feedback you are looking for, consider reaching out to local realtors and property managers. Ask them about various areas. When it comes to Property Management companies especially, ask them about which areas the'd want to work in and which ones they'd want to avoid and why? This should give you some guidance.

Best!

I've been investing in St Louis since 2014.  All of them are in S. City and were purchased for less than 70k.  I will tell you that though the pro forma for these properties rock, the maintenance (buildings are generally >100 years old), vacancies, and make ready expenses from turnover; it is generally hard to make a decent return.  However, St. Louis is on fire right now, and there is some explosive revitalization happening in Tower Grove, Benton Park, and Fox Park.  Also, Chesterfield is one of the fastest growing cities in the country.

I live and invest in St. Louis. The statistics can be misleading because the city proper is a separate political entity from the county and surrounding metro. Yes, on the whole the CITY population has been in decline since the 1950s, but many neighborhoods, especially in South City are seeing population growth (63116 for one) post-Great Financial Crisis and there is a lot of revitalization and investment taking place.

The city of St. Louis is only 60 square miles out of 360 sq. miles that makes up Greater St. Louis. The Greater St. Louis metro has seen steady population growth over the years, even if the stats on the city proper are much gloomier. Greater St. Louis

St. Louis County has been extremely stable/slowly growing for decades. The population in St. Charles County to the northwest has more than doubled in my lifetime. Jefferson County (south) and Franklin County (southwest) have seen steady growth for decades. Madison County IL has been had a steady population since the 1970s.

There is plenty of opportunity in St. Louis, you just need to drill down your target area, sometimes to a single street or a few blocks, more than in some markets that see growth/decline more broadly across a larger area.

I agree with @Max Householder I would suspect a large portion of the population decline in St. Louis City is in North St. Louis (still part of the city, just generally considered worse than South St. Louis). But investing in our hometown is easy for us since we live here and can go drive the streets/neighborhoods we're investing in, for out of towners you'll need a good man on the ground to really know the lay of the land for you. 

Originally posted by @Max Householder :

I live and invest in St. Louis. The statistics can be misleading because the city proper is a separate political entity from the county and surrounding metro. Yes, on the whole the CITY population has been in decline since the 1950s, but many neighborhoods, especially in South City are seeing population growth (63116 for one) post-Great Financial Crisis and there is a lot of revitalization and investment taking place.

The city of St. Louis is only 60 square miles out of 360 sq. miles that makes up Greater St. Louis. The Greater St. Louis metro has seen steady population growth over the years, even if the stats on the city proper are much gloomier. Greater St. Louis

St. Louis County has been extremely stable/slowly growing for decades. The population in St. Charles County to the northwest has more than doubled in my lifetime. Jefferson County (south) and Franklin County (southwest) have seen steady growth for decades. Madison County IL has been had a steady population since the 1970s.

There is plenty of opportunity in St. Louis, you just need to drill down your target area, sometimes to a single street or a few blocks, more than in some markets that see growth/decline more broadly across a larger area.

Thanks for the info, I'll definitely start looking around the greater area. 

Originally posted by @Donald S. :

I agree with @Max Householder I would suspect a large portion of the population decline in St. Louis City is in North St. Louis (still part of the city, just generally considered worse than South St. Louis). But investing in our hometown is easy for us since we live here and can go drive the streets/neighborhoods we're investing in, for out of towners you'll need a good man on the ground to really know the lay of the land for you. 

 Yea it's been a challenge to really nail down who knows what they're talking about and who's just trying to make a sale

Originally posted by @John Conte :

Hello everyone, glad to be a part of BP, seems to be a gold mine of valuable information and helpful people!

First time investor, 25, I've been researching out of state markets for buy and hold rentals (I live in NY), and some clarification/direction as to which markets some other investors have had good returns/cash flow from, not looking for a flip, or even necessarily vast appreciation, I have some investments, which are nice to have but I'd like to move some of that into rental properties to have more effective cash flow. 

Some of the markets I've been considering are St. Louis and Cleveland, some very affordable multifamily buildings available, I'm also considering single family/young couple oriented houses in the Durham/Charlotte/Raleigh areas, Columbus OH. My dollar will go much further in these markets than the NYC/NJ area, and from what I've seen there's better potential for growth in these areas than in, say, most of Pennsylvania/Connecticut.

I'm looking to spend anywhere between 40k-130k, and I'll bullet some points of concern I have that my research has fallen short on/I'd like some experienced insight on

  • High crime areas: I've gotten mixed ideas about how to handle these, and what they mean for stable rental income. Is it more the amount of crime that negatively affects buying? or the type of crime? Does adding increased security measures to my property (i.e. security cams, code locks, etc.) make renting more attractive/profitable?
  • Population Migration/Employment Data: St. Louis/Cleveland have had steadily declining populations, any investors with holdings in these areas have comments or thoughts on this and its effect on the local areas? Again I'm not looking to swoop in and hike rent up exorbitantly but if I'm going to be forced to lower rent over time that's something to consider.
  • Tenant Screening in Low Income Areas: Have any investors been able to hang on to quality, long term tenants? And if so, are you the anomaly or is it relatively simple to do so with some diligence and research?

Thanks for your insight!

 When you are in low income areas the tenant base is much more transient in nature. Moving every year is a norm for a lot of people. These folks tend not to plan to far ahead. Things that seem small to you & I can be life changing for these folks. Small changes can lead to them moving.

Hi John @John Conte

First off welcome! Multi-family investing is the way to go. Forget SFH's. St.Louis NO. Cleveland NO. They are affordable for a reason!!

Columbus, OH YES! Increasing population and increasing job growth = appreciation and rental income growth. 

Quick Stats for Columbus: 

Estimated median household income in 2016: $49,602 (it was $37,897 in 2000)

Estimated median house or condo value in 2016: $140,700 (it was $99,100 in 2000)

Crime: 414.8

Job Growth: 1.04% 

Population 2000 = 714,984  Population 2016 = 860,000+

Sources: 

https://www.deptofnumbers.com/employment/metros/

Read more: http://www.city-data.com/city/Columbus-Ohio.html#ixzz5M7GH4OlY

https://www.google.com/search?q=Columbus%2C+Ohio+p...