Fining Good Multi - Family Units in St. Louis

Saint Charles, MO · Member since 2017 · 4 posts · 2 votes

Greetings,

I am newer to bigger pockets but love the community. I joined about a month back and have been trying to consume as much knowledge as possible and make as many friends along the way as I could. I am ready to purchase my first investment property and I live close to St. Louis and want to try to get a good deal on a 4 unit multi family. Anyone else looking in this area at 4 unit properties that would be up for sharing any investment tips?

Thanks,

Adam

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Max Householder

Rental Property Investor · Saint Louis, MO · Member since 2014 · 313 posts · 326 votes

@Adam Stout Another thing I meant to add on is to look closely at the layout of the unit. Many 1-bedroom units have a "shotgun" or walk-through layout where the bedroom is in the middle of the unit and the kitchen is in the back. It doesn't seem that strange when the unit is empty, but once you walk through a few of them that are occupied you'll realize you're walking through the tenant's bedroom to get to the bathroom or kitchen. I imagine this wasn't a big deal in the early 1900s because most workers only went home to sleep and eat. People today, especially millennials, want an open floorplan where they can entertain, have friends over, etc. The shotgun units tend to be cheaper to acquire, but you'll get lower rents on most of them and they're difficult to renovate into a layout that's more modern.

Also take note of the sqft per unit. I've been in some 1-bedroom units that are only 600-700 sqft and they feel like you're walking through a closet. At 750-850 sqft per unit, it feels so much bigger and you potentially have room to maneuver if you want to take out a wall to try and alter the floorplan to something more modern. Anyways, just a tip that doesn't always stand out right away.

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Curtis Rouse Jr
Realtor · Atlanta, GA · Member since 2015 · 266 posts · 182 votes
9y
@Adam Stout Welcome to the BP Community, this place has a world of knowledge and you can literally leverage it to the max for all your real estate endeavors.
So to answer your question, I'm not an investor in the St. Louis market, but what I can tell you what will work in any market if you're willing to put in the work like we all initially had to do. My advice if your looking for any type of investment is to take action and in relation to your 4 unit MFR I recommend to start attending local REIAs/local events to network, get on the phone and start calling realtors who have listings for smaller MFR's because they are more prone to working with investors, start "driving for dollars" as we call it on BP which is basically driving around and finding properties off or on market, call all the local banks (preferably smaller credit unions/family owned banks) to see if they have any REO's on their books, check craigslist/zillow/redfin/etc to get a feel for the market and most importantly is to start analyzing the properties. I recommend using the BP calculator or your own spreadsheet (I use both) if you already have one to run the numbers so you can get a feel for the potential returns based on "YOUR" specific target market which is so key. Once you've analyzed a deal and unsure of the numbers, no problem, post it on here and we will all be here to help out.
Best of luck and if you have any other questions feel free to message me at anytime!
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Megan GreathousePro Member
Rental Property Investor · Saint Louis, MO · Member since 2017 · 397 posts · 469 votes
9y
@Adam Stout... welcome! What area of St. Louis are you looking in? City or county? Any specific neighborhoods? Would this be strictly an investment property, or would you house hack and live in one of the units?
I'm constantly searching for multi-families in the area, and it seems to me like a tough market. I watch MLS listings every day and rarely find deals that would meet my cash flow and cash-on-cash return criteria, so I'm trying to look for off-market deals as well. Happy to share more details based on what/where your interest lies.
Podcast Guest on Show #387
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Drew Kimminau
Rental Property Investor · Washington, MO · Member since 2015 · 30 posts · 14 votes
9y
I have wanted a 4 family for awhile too, there are quite a few for sale down in South City near tower grove park. They have pretty good cash flow, just need to watch out because many of those properties are pretty old. Just make sure they aren't going to cost a ton to fix up down the road.
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Adam Stout
OP
Saint Charles, MO · Member since 2017 · 4 posts · 2 votes
9y
@Megan Greathouse ... Thanks, I appreciate the warm welcome! I have been looking at multi families around Cherokee street and south city. I am looking to purchase a property strictly as an investment property and will also probably use a property management company to help as well.
What is your cash flow criteria if you don't mind me asking? Are there any key things you look for in the property that can be subtle but could also drastically affect the cash flow potential of the property?
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Max Householder
Rental Property Investor · Saint Louis, MO · Member since 2014 · 313 posts · 326 votes
9y
Hey Adam, welcome! My wife and I invest on the side targeting small multis in south city. We currently own one 4-family. We have been looking for a second property all year and have yet to snag one. The best deals on paper that I've seen from the MLS are in fringe areas at best. Anything in or near the "hot" areas like Tower Grove seem wildly overpriced to me. Fox Park has become a hot area for rehabs if you have an appetite for more of a project.
I find my self targeting more boring/stable areas like 63109 (we live in this zip and own the 1 property here as well), Christy Park, and Bevo. It's not as exciting as the rapidly appreciating areas, but you've got a lot of solid blue collar and immigrant renters and less crime. That said, there is hardly any inventory in these areas and without the appreciating property values, anything that needs a decent amount of work doesn't pencil out for me.
Around Cherokee is a good place to look, but be very careful as it is extremely block-to-block. IMO stay north of Potomac, East of Pennsylvania, and probably south of Wyoming. The closer to the commercial strip there, the better. I would recommend contacting my agent/PM @Peter MacKercher to get some valuable insight on the lay of the land in south city. I believe @Megan Greathouse is a client of Peter's as well. Good luck! Shoot me a PM if you want to talk further.
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Megan GreathousePro Member
Rental Property Investor · Saint Louis, MO · Member since 2017 · 397 posts · 469 votes
9y
@Adam Stout, happy to share! @Max Householder hit the nail on the head with Cherokee, and South City in general... the quality of the area and the tenants you can get can vary drastically block by block. The 4-family I bought through @Peter MacKercher and his team is just a block north of Cherokee St, and I definitely would focus as close as possible to the businesses and entertainment along Cherokee. Fox Park is interesting, and I'm keeping my eye on that as well, but most of those properties need a good deal of work. I also like Tower Grove, Shaw, Holly Hills, Northampton, Southampton, etc... but I think everything is selling too high in those neighborhoods right now for the numbers to make sense.
As for my criteria, I have two main things I look for. First, I want to achieve a cash-on-cash return of 10% or more. Anything much lower than that and I might as well just invest my money in the stock market, since it should return 7 - 9% over the long run. For monthly cash flow after all expenses/property management/repairs/capex, I want a minimum of $100 per unit, per month... and I'd prefer $150. A couple of things to watch for that can really kill your cash flow would be high property taxes and excessive water use or water leaks (since landlords usually pay the water bill on multifamily properties). I'm sure there are others as well that I haven't come across... I'm still new to investing. Best of luck, Adam!
Podcast Guest on Show #387
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Max Householder
Rental Property Investor · Saint Louis, MO · Member since 2014 · 313 posts · 326 votes
9y
@Adam Stout Another thing I meant to add on is to look closely at the layout of the unit. Many 1-bedroom units have a "shotgun" or walk-through layout where the bedroom is in the middle of the unit and the kitchen is in the back. It doesn't seem that strange when the unit is empty, but once you walk through a few of them that are occupied you'll realize you're walking through the tenant's bedroom to get to the bathroom or kitchen. I imagine this wasn't a big deal in the early 1900s because most workers only went home to sleep and eat. People today, especially millennials, want an open floorplan where they can entertain, have friends over, etc. The shotgun units tend to be cheaper to acquire, but you'll get lower rents on most of them and they're difficult to renovate into a layout that's more modern.
Also take note of the sqft per unit. I've been in some 1-bedroom units that are only 600-700 sqft and they feel like you're walking through a closet. At 750-850 sqft per unit, it feels so much bigger and you potentially have room to maneuver if you want to take out a wall to try and alter the floorplan to something more modern. Anyways, just a tip that doesn't always stand out right away.
4 Reply
Adam Stout
OP
Saint Charles, MO · Member since 2017 · 4 posts · 2 votes
9y
@Megan Greathouse @Max Householder Thanks for the advice, it all seems very helpful. Good news is I am working with @Peter MacKercher already so I have someone to keep me out of major trouble. :)
Now it's all about finding that first place!
1 Reply
David OunanianBusiness Member
Real Estate Broker · St. Louis, MO · Member since 2017 · 380 posts · 195 votes
9y
Great advice @Megan Greathouse and @Max Householder! Best of luck on your search @Adam Stout and let us know how its progressing!
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Kenton Coffman
Real Estate Agent · St. Louis, MO · Member since 2017 · 34 posts · 26 votes
6y
@Adam Stout you've got some great people replying to your thread! I recognize and know most of them and they give solid advice. I really like the South Hampton and Princeton Heights neighborhoods but they're already getting kind of expensive! Princeton Heights west of gravois borders St. Louis Hills which is too expensive for cash flow, but I think PH still has some deals to be found
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