Strategies for Real Estate Investing

Buying & Selling Real Estate
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Strategies for Real Estate Investing

Abhinav Bhardwaj
Seattle · Member since 2018 · 3 posts · 2 votes

Hi,

I’m Abhi from the Seattle area looking to invest in real estate, out of state. I invest in the US stock market but I'd like to move towards a new asset class as stock market albeit profitable, "if correctly picked", does not excite me a lot. 

After reading a lot of books and listening to multiple podcasts, I've decided to invest in rental properties(SFR and Multiplex) as I'm more of a buy and hold guy.

I am working on my 1, 3, 5 and 10 year plan and constantly curating these plans to achieve best results. After a lot of analysis paralysis I've hit a blocker, where in I'm not sure what asset class to start with.

Problem:

I'm able to save $120K yearly(including bonus, extra hours) , "super frugal"(My wife hates it) through my day time job and not sure how to utilize it in a way for the best returns.  Currently, I'm considering 3 strategies, and would like suggestions or advice from experienced investors.

Strategies:

1) Buy multiple (SFR/ small multiplex) properties in desired locations, fitting my criteria every year and keep repeating it every year. I can increase the number of units I buy through the BRRRR strategy or partnering with multiple investors.

2) Wait for 2 years, have around $250K and do a large multifamily deal, around ~1.25M with 20% down. This scares me as I'm super new to real estate, and don't want to get in too deep with less experience.  

Cons:

I have to sit on the sidelines and wait. Also, Money today is more valuable than money after 2 years.

3) Partner with experienced investors in multifamily deals[apartments] every year, learn from them, and keep growing my portfolio.

Feedback is appreciated. 

Please let me know if there are any other strategies I could use to grow my business. 

Thanks,

Abhi

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  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    7y

    @Abhinav Bhardwaj

    Welcome to BP community! 

    I think your strategies #1 & #3 are realistic. I'd start implementing #1 while be on the lookout for a potential partner. Keep in mind, for someone experienced to partner up with you they need to have a reason - in other words you need to be able to solve some of their pain points. So start thinking what you're good at and become better at it to be able to offer such service!

    My best!

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  • Mike Krieg
    Investor / Syndicator · Austin, TX · Member since 2015 · 367 posts · 220 votes
    7y

    @Abhinav Bhardwaj You're correct in considering the potential capital destruction in the stock market. Diversification is the only free lunch as they say in business school. Here is what I do: I invest with different sponsors, among different asset classes (multifamily, mobile home parks, and self storage) and in different markets (Florida, Georgia, Arizona, Texas). I've researched the best sponsors in each asset class and market and partner with them on my investing. One of my personal criteria also is the potential for cash outs during the life of the hold period. If the sponsor can add enough value to the deal or asset and do a cash out refi for investors, I'm able to redeploy that capital in other deals, thus increasing my IRR and cash flow. For example, I invest $100,000 in a deal A. In year 3 the property is refinanced and let's say I receive $50,000 on the refinance. I still own my $100,000 stake in deal A but now can take my $50,000 and invest in deal B. If both deals pay 8% in distributions, then I'm now getting 8% on $150,000 in year 3. This doesn't happen if you choose an asset that doesn't have a refi possibility or a sponsor who cannot achieve this. As far as assets, I'm targeting Storage and MHC's. Be careful with MF, no matter the market right now.

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  • Holly Williams
    Rental Property Investor · New York City · Member since 2014 · 208 posts · 271 votes
    7y

    I'm still bullish on MF, although it's important to find really smart syndicators that have taken the time and put in the hard work to develop STRONG relationships with brokers, bankers, and management companies in the market where you invest.  That takes a ton of time, and I was not able to do it when I had a W-2 job.  That's what led me to investing in passive syndications. I haven't found returns that match what I'm getting as an LP on syndications, and that's why I haven't done a medium-sized deal myself.  

    Most of all welcome to Bigger Pockets! You are in a great place, and there are many experienced people here that are willing to share.

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  • Abhinav Bhardwaj
    OP
    Seattle · Member since 2018 · 3 posts · 2 votes
    7y

    Thanks a lot  all for the valuable information. I agree, I should get started with my first deal, get some experience, and start networking with other investors at local REIs. 

    @Mike Krieg What are your reservations with MF? I thought the demand for MF would only increase over time.

    1Reply
  • Mike Krieg
    Investor / Syndicator · Austin, TX · Member since 2015 · 367 posts · 220 votes
    7y

    @Abhinav Bhardwaj Hi Abhinav, I don't have reservations generally at all. I am very pro MF and will be doing 3-5 deals this year undoubtedly and have a couple in the pipeline now. My only point is that we need to be very careful right now in the cycle. Some newer syndicators who have never seen the brutality of a down cycle will overpay in this stage of the cycle. Just make sure you do your diligence. That's all I'm saying.

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  • Josh Oaten
    Investor · Phoenix, AZ · Member since 2017 · 261 posts · 143 votes
    7y

    @Abhinav Bhardwaj

    Dude! Sounds like you have this thing mapped out pretty well already.

    I would also say #1 and #3. I have done this in reverse where i am currently assisting an investor in large multifamily and am now also looking for smaller scale multifamily apartments for me and my wife as a personal asset. 

    The reason I dont like #2 is because at the end of the day your not in the game for a whole year. In a years time I could have have bought a 4-plex, implemented 1/3 of my value add strategy, created value and learned a ton, while you are waiting.

    I hope this helps! 

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  • Abhinav Bhardwaj
    OP
    Seattle · Member since 2018 · 3 posts · 2 votes
    7y

    @Josh Oaten I agree, #2 is not making sense anymore, when I'm thinking out loud. I've decided to go with #1, and in 2 years, after I get some experience get into #3.

    Thanks all for your help.

    1Reply
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