Out of state Multifamily

18 Replies

My background:

I'm a 33 year old engineer that has one 4-10 job and does contract work on the side for an average of 65hrs a week. I have $150k cash to invest in, I have an open line of credit for $250k with a great rate, and I have other investments I could pull from if needed. I live in California and have been house hacking my property for several years which more than covers my mortgage. In the short term I'm planning on quitting my day job and solely doing contract engineering to make time for real estate and to have a life...

What I want:

I want enough relatively passive income to cover day to day expenses, and only work for fun or on projects I love. My main goal is to have more free time, so I don't want to trade a full time job for full time property management, but I also don't need an investment to be entirely turnkey. I don't have a door count goal, but a good end goal would be to net $15k a month by 2030. I want to invest in properties I'd live in, and net at least $500 per month per unit to be worth the work.

What I don't want:

I don't want to flip houses, BRRRR, or make life miserable for my tenants. I have yet to have an unhappy tenant and I don't want to start now.

My thoughts:

Where I live properties are far too expensive to turn an ROI for buy and hold, so I'm looking at Tampa and Houston markets (I have a PM friend in Tampa already that I trust). I'm mostly thinking of muti family homes in middle income areas. With the cash on hand and the line of credit, I think I could offer cash for a MF and then refinance to pull out 80%. Then maybe do a conventional for a second. I've had a hard time finding decent ROI anywhere but I know they are out there. I'm mostly using DealCheck to analyze properties.

My request:

I would greatly appreciate any and all advice on how to realize my goals; areas to invest, investment types, financing options, etc.

Thank you all for reading my small novel, and for taking the time to help a fellow investor.

Sincerely,

Luke Haberkern

Good morning Luke!

Excited to read these posts as it seems you're on the right path to designing your ideal life. Glad to hear the househack is working for you. 

I totally understand where you're coming from...NY and CA share the same problems with respect to high price-points, tenant friendly laws, and low ROIs for rental deals.

That being said, Tampa is a great option to look into although there aren't many MFRs in middle-income areas. I'd recommend chatting with @Steven Torres who can share some insight on the SFR and MFR options in Central Florida.

Best of luck to you moving forward!

Abel

I would stick to small multifamily or single family homes in the suburbs here in the midwest with good schools. You'll  have good tenants and things will be a lot more hands-off and passive.

You have a great launching pad. I'd say syndications or 2+ unit multi family (turn key) would be great. Interview and meet the team you will use. From there understand the market and go for it. 

Not sure really where you are in the investment journey from your post...but your foundation is great.  The day job certainly makes things easier to get financed.  Huge plus there!  Again not sure how many investments you have already, or what the living situation is, but personally I think the house hack is such a powerful tool and launching pad to be able to cut expenses really low and go out on a new venture.  Now given your cash you are looking to invest I feel like you may be a bit further down the road than a house hack..But I don't know! maybe there is like a mega house hack of a mix used building you could live in and live for free, while getting ready to leave the day job.  So just a crazy idea but fantastic plan and congrats on getting to this point!

@Luke Haberkern

Hi Luke, the Tampa area is also a HOT market!!!!  There are still some small windows of opportunity here.  CASH talks!!!!  I have made over 30 CASH offers in the last two months and I have been beat out by CASH offers with no contingencies.  You have to either offer way more than asking and have inspection time or the other offers win.  It's crazy!!!!  

@Mya Toohey thank you for this feedback. How do you feel about tossing in $100k earnest to the offer? From what I understand the check doesn't cash till near closing, and I have wiggle room out if I find out anything about the property that's high risk. Can a big earnest combined with a cash offer and small $100 option create a good hook?

@Shaniqua Henry thank you Shaniqua. I feel very fortunate. I will say it was terrifying putting every penny I had into my first property. But I always knew I'd rent out the main house and live in the ADU, so it should pay for itself. House hacking has been a life changer for me, and I recommend it to anyone who can swing it. Good luck!

@Luke Haberkern

Welllllllllll............In Florida, the Closing Attorneys deposit the check once received.  Sooooooooooo, they do hold your money in their escrow account until closing.  Now, on the other hand, you have 72 hours to produce said check to the attorneys not including weekends.  If you have a solid team that can get out there in that amount of time and you can cancel before you even have to give the check...you could be safe.  I would just hate having that much money tied up if, in the case that you back out due to inspections, it can take up to 3 weeks to get your escrow back.  But, with that said, a $5000-$10,000 escrow would probably do the trick.  People don't ever give that high of an escrow unless its a couple million dollar home...I love the enthusiasm though! 

@Luke Haberkern

The problem is, Florida investors don't seem to care about a good deal anymore, they want someplace to put their money.  At least that's what it looks like on paper.  I only know from my recent experience with the market and my above list price offers, coming from experienced out-of-state investors.  If the numbers work even at the higher price, they know they will get more rent every year, so a "deal" isn't so much a "deal" as it is a safe place to invest money in this day and age.  You know that people will always need homes to rent, especially since this moratorium ends in July.  Those tenants will all need places to live and as people still can't catch up with their mortgages, rentals will become hard to find and the rents will increase.  Right now where I live, a 3/2 1200 sq ft is renting for $2600.  Last year, this same house, in the same area would have been $1900.  Just be prepared to make your highest and best offers when you make a "deal" offer.  I'll be happy to help any way that I can!   

@Luke Haberkern

Oh!  and Florida just stopped, at last minute, the PUA payments as a return to work initiative, so, some of those people who don't have jobs and were making bills work on the PUA will also have to go back to work making less money, and then....losing....homes and being evicted...It's going to be a crazy couple of months here...people needing to sell houses before foreclosure and the need to rent quickly before being evicted... 

Originally posted by @Luke Haberkern :

@Abel Curiel Thank you Abel, I will reach out

Hey, I'm in SoCal, too. Do you think it's still possible to Househack here, or do you think it's too late to find that type of deal?

 

@Luke Haberkern

I saw you were looking at the Houston market. I'm currently househacking in Houston using airbnb to rent out our 3 spare bedrooms. It has been awesome so far, covering the PITI plus $500-$600 dollars on average. I would recommend looking at the Houston area for an investment property, especially outside the city in suburb area where the purchase prices are cheaper and it is more likely to cashflow.

@Kay C. Yes it is. I had some money from selling my first house in CO and put every dime of it into a 20% down on a house here. I picked it because it had a separate ADU with split utilities and a separate entrance. It also had its own yard and space to build on. So I rent out the main 3/2 house and live in the ADU. The rent easily covers the mortgage. Also if I travel, I can rent my ADU and it covers travel costs. You can definitely house hack here. Just look for something that's desirable even when split.

Hello Luke Haberkern. You described a living situation that is working at a time of indicision with a new Administration that wants to tax every cent that you are making and even more in California. You set a Goal to have $15,000 a month of Passive Income by 2030 and do that with Rental properties in a State that you do not live in. I know that you have read the stories of the girl, straight out of High School, who started buying Rental Houses and had 100 doors by 23 and retired to Switzerland, leaving her Team to manage and maintain for her. But, "Look before you Leap." You don't want to give up what you have, at a time of big Economic Change, for an unforseeable future. 

Hey @Luke Haberkern . If you are looking for a hands-off way to investing in real estate, I would recommend looking into being a passive investor in an apartment syndication deal. This allows you to own part of large apartment complexes, receive a return on your money, and learn from the sponsors while being hands-off. There are multiple benefits of investing in multifamily real estate. Here's an article on a few of them: https://thinkmultifamily.com/f... 

PM me if you have any questions about passive investing or apartment syndications. I'd love to help out in any way I can. 

Happy Investing!