Beginner with 2 Res and 2 Comm properties - What to do next?

Question

34 year old new here and to real estate. I bought 2-300 sq. ft. comm and 1-700 1 bed condo 2 years ago and 1-680 sq. ft. 2 bed condo in May, have about 380k in debt (25 year fixed loan) and about 250k in equity in the units. Units cash flow and are in a small resort town where real estate is booming. Residential condos are selling for $400+ sq ft. and no new builds will happen ever as town is surrounded by non-develop-able land. Looking at maybe going out of state and buying bulk single family or an apartment building. I own a business and make about 250k/year business is worth 1 million if I were to sell. Would like to sell biz in the next 9-10 years as it takes a lot of my time but money is good. Would like to be financially at 43 and live on rents.

What should I do to expand my portfolio so I can get out of my biz?

Charles Carillo · Answer

Hi Brendon,

Unless you have a great boots on ground team and know the market, it is difficult to purchase and manage out of state properties. I have out of state multifamily properties that I use to self-manage (when I lived near them) years back but, now they are professionally managed and my team is in place there.

The easiest way for you to expand your portfolio is to most likely invest through syndications. For most individuals that have high paying careers, property sourcing and management is not the best use of your time. If you are looking to be financially free and live off the investments forever; look for syndicators that plan on doing “legacy plays” where they rehab the property, refinance and hold onto the property for life. The syndicators handle all of the work and the limited partners (you) are just providing money. It will not require any additional time on your part after you have done your proper due diligence.

Kerry Baird · Answer

Welcome to the site.  Not so many of us are in the situation you are, but start out saving for one house, and then another house.  After 10 we go into commercial or perhaps a few small plex deals or a small apartment.  You’ve got the potential for a faster path, but will need coaching or a mentor

Just like Monopoly, we can trade up using exchanges and minimizing taxation.  To very much simplify it, why go back and buy little green houses when the ultimate goal is cash flow from a lot of red apartment buildings?  I have a number of little green houses, and like them very much, and could explain all kinds of details about how to buy houses.  Houses and apartments are valued differently, financing is different, the process of making an offer is different.

You will obviously want to be looking at cash-flow deals, most likely in the multi family space.  I hope others experienced in apartments will chime in as I put in some keywords, but in the meantime I suggest that you do a search here on syndication, and on multifamily.

Again, welcome.  I look forward to ready about your continued success as you pay it forward.