Wanting to scale up in properties, but not sure how.

6 Replies

This is not a post on how to get started. I currently have 22 SfP and/ or owner Financed notes.  When I finish filling the last property I will be bumping close to 10k profit a month from them. ( after I pay off some credit card debt I used for my business) Since I have rolled most of my profit back into the business and doing rehabs etc I don’t have strong tax returns. I’m also self employed so most of my purchases have been with alternative financing without going thru the banks. I have been reading about the folks getting multiple units. I don’t have the reserves or the ability to get a loan based on tax returns. I think I would like to scale up in properties, but don’t see my way clear to do so. I’m not sure if I should just stick with what has worked thus far or scale into multi unites. If  I want to move up I’m at a lost of how to proceed.

Please advise.

SFHs can be a real drain unless you are already financially well off. Your best option to scale up would be to sell and roll the SFHs into apartment complexes.

The value is in having what you have and trading it in a move up. They are far too labour intensive and time consuming to hold for what is basically low returns per door. In time your expenses will increase considerably on individual doors and eat up your cash flow.

I would be looking to sell now while the SFH market is still high. Once it drops you will be stuck holding with diminished returnes.

Account Closed, are you able to continue to profitably finance yourself through alternative financing?  If so, I don't see what would stop you from moving into MFRs or apartments.

Once you have a seasoned apartment, you don't need to worry about your personal tax return as much as my understanding is that commercial lenders will primarily care about the deal itself (particularly on a refi).

Originally posted by Account Closed:

This is not a post on how to get started. I currently have 22 SfP and/ or owner Financed notes.  When I finish filling the last property I will be bumping close to 10k profit a month from them. ( after I pay off some credit card debt I used for my business) Since I have rolled most of my profit back into the business and doing rehabs etc I don’t have strong tax returns. I’m also self employed so most of my purchases have been with alternative financing without going thru the banks. I have been reading about the folks getting multiple units. I don’t have the reserves or the ability to get a loan based on tax returns. I think I would like to scale up in properties, but don’t see my way clear to do so. I’m not sure if I should just stick with what has worked thus far or scale into multi unites. If  I want to move up I’m at a lost of how to proceed.

Please advise.

WOW impressive!

I wont clutter this thread up with questions.   Just a request/suggestion to start a thread with how you get approx $450 cash flow on your rentals.

Reason I am interested is I see most people need 40, 50 or more doors to get to the magical 10K profit per month.  For this reason I have stuck to flips as I don't want to have to have so many doors to make less than you can with just 2 flips a year.


BUT with your 450/mo profit I may need to change my business model.


Thank you in advance

Originally posted by @Thomas S. :

SFHs can be a real drain unless you are already financially well off. Your best option to scale up would be to sell and roll the SFHs into apartment complexes.

The value is in having what you have and trading it in a move up. They are far too labour intensive and time consuming to hold for what is basically low returns per door. In time your expenses will increase considerably on individual doors and eat up your cash flow.

I would be looking to sell now while the SFH market is still high. Once it drops you will be stuck holding with diminished returnes.

He's getting approx $450/mo/door

You really think MF will get him better returns?

@Michael Plante

The reason the cashflow is showing high is. A few of the properties are free and clear and I got a good deal on most. I sold a few properties last year as well for cash in order to buy a couple of rentals outright that cashed flowed well at a low purchase price. The resale would not be that great, but the cashflow is a great return on investment. Hope this helps awser your question.

It took me a number of years to get here so it is not all that glamorous compared to some of the other REI players highlighted story. We are a small mom & pop outfit and in some ways we want it that way.

@Brian Schmelzlen 

Getting a seasoned apartment is easier said than done. I had a family member that asked me years ago, why I didn’t start out in apartments? I didn’t have the  knowledge nor the income to get started there. If there is reasonable training for that I’m ears.