Starting out in the Charlotte Metro

[Arthur Means]

Hello fellow BP'ers,

First let me say that I am a frequent reader of BP blog posts, and through those posts, I have been steered more toward multifamily properties lately.  I used to think that I wanted single family properties because they were easier to sell, but through my reading here, I feel like Multifamily is ultimately more profitable and the costs per door seems to be far less.

Currently I have one rental that I have been successfully self-managing for about 5 years (60K equity).  All rent is collected online and any maintenance is farmed out to someone local, I do not have dedicated people that I call..  I also just sold my primary residence in the St. Louis Area for a 70K profit (paid off all debt with it).  I have been relocated to Charlotte for work.  I now have zero debt (renting) and have about $5,000 per month in expendable income.

At this point, I would like to focus on St. Louis and Charlotte since I am familiar with one, and local to the other.  Part of me wants to dive in with both feet and buy a mobile home park, or storage units, or even a small apartment building.  The other part of me says I should slow down and maybe start with a duplex or at most, a quad.

But, like most here, there is alot I do not know.

First on the list - Save some backup funds, establish some kind of formal business, and find an accountant.

Next - Search, research and offer on a property.

So, I am looking for good guidelines on how much money I should expect to set aside for operating funds.  Ultimately, I would like to establish business credit for property financing that is not personally guaranteed by me (not sure if this is possible, especially immediately)

As far as evaluating properties, I have read alot about the 1% and 2% rule, and they seem to be good guidelines to follow. I have also tried to understand CapEx percentages, but everyone seems to have different thresholds for what they consider a "good deal." My goal is a property that cash flows. I am not looking for flips, or huge appreciation. I just want to acquire enough properties to live on the proceeds. I would like to be able to look at a property and within a short time, determine if it should be profitable. Is the 2% rule enough for this?

I would like to finance all properties in this scenario and I expect the properties to be managed by a PM. And the rental house I do have should sell to its current tenants in June. So a 1031 may be an option there, but im not sure if I can exchange a SFH to a multi, ill be consulting a 1031 expert on this.

So - How much operating capital?  Is the 2% rule enough? How aggressive should one be who is relatively new?  I have been a landlord.  Should I play it safe on something like a duplex? Or dive in on a 6-unit villa?

Thanks so much for any input!  Sorry for the long post

[Chris T.]

@Arthur Means - Welcome to Charlotte!

If you haven't already discovered, there unfortunately is not an abundance of small multi-families here in the Charlotte area.  If you are patient and expand your search outside of the 485 loop you will find some where the numbers make sense.

I invite you to come out to a monthly meetup of local BiggerPocket members that I host the 1st Tuesday of each month.  

Charlotte, NC REI Networking Meetup - Tues. Dec. 3rd

It is a good chance to meet other active investors and learn a little more about what and where people are investing here in the Charlotte area.