Getting started in multifamily investing

[Bob Bates]

I'm located in Salem, Oregon and am finding it difficult to locate multifamily properties particularly ones that cashflow. The MLS has only a few overpriced properties that roost for months. I've considered direct mail but my family property has been inundated with letters and cold calls which leaves me at a loss as to how to appear different than everone else.

Another question, should I be looking in other parts of the country with better value to rent ratios?  In this area the average multifamily is running $135k-$175k per door for rents of $1200/mo for a two bedroom.

[Bjorn Ahlblad]

@Bob Bates You pretty much summed it up for most of the west coast. I invest in Olympia wa and west of there. 5-7 years ago you could buy great properties, do minimal work, and be cash flowing from day one. Today it is no longer the case. So you need to look out of state I think. I'm retired and we have all the doors we want right here so I don't really know which markets are best; but plenty of people on here do. 

Do some searches here on the site and I'm sure you will come up with some possibilities. Join some LL groups in your area and meet some fellow investors; you might be surprised to know that there are deals being done regularly that never hit the internet. They may not be barn burners but I have seen some that still will work-be sure of your underwriting. People buying MF on the MLS today will not be land lords in a couple of years!

[Bob Bates]

Quote from @Bjorn Ahlblad: People buying MF on the MLS today will not be land lords in a couple of years!

I think you are dead on.  Of the properties I do see, margins are razor thin and a lot don't cash flow even based on a quick $5000 per month per million rule of thumb.  I'm guessing a lot miss that.  The other obstacle are the non-investor high wage earners looking for depreciation to offset their income who aren't overly concerned with the cash flow side of the equation.

[Josh Oaten]

Quote from @Bob Bates:

I'm located in Salem, Oregon and am finding it difficult to locate multifamily properties particularly ones that cashflow. The MLS has only a few overpriced properties that roost for months. I've considered direct mail but my family property has been inundated with letters and cold calls which leaves me at a loss as to how to appear different than everone else.

Another question, should I be looking in other parts of the country with better value to rent ratios?  In this area the average multifamily is running $135k-$175k per door for rents of $1200/mo for a two bedroom.

Bob,

To me it all depends on what size apartments you are looking for/at.

I think right now the issue you are finding is across most of the major US markets. To me you are never going to find a good deal on the MLS because those are deals that have already been through multiple hands that have said no to them. Have you built any broker relationships yet? 

At a glance, the Salem market looks like a decent size and growing. If it is your first time, it may be best to find something local so you don’t have to travel if there are issues.

[Bob Bates]

I need to build more commercial broker relationships.  I've got a commercial broker who is in the process of retiring an a residential broker who has helped with a couple of commercial properties I found on the MLS.

[Lee Ripma]

@Bob Bates

I have found that good deals are made not found. So it might be possible to make some of the deals you are seeing work. I have personally made deals work that plenty of others passed on or were sitting on the market. 

You can also go for more favorable price to rent ratios in affordable GROWING markets. Here is a list of markets to consider - it's actually not that extensive of a list once you filter for both affordable and growing and you're looking in MSAs with 1M+ population. Go down the list, do some research, and dive into a few of these and/or work on building broker relationships in your local market (and any of your target markets). Remember that growth (demand) + limited supply = value increases, cap rate compression, and lower cash flow. So the best cash flow is is the smallest markets with negative growth. Not the goal. So you're looking for a balance of equity and cash flow not the most cash flow you can get (in my humble opinion, supported by my own calculations). Good luck! 

• Phoenix, AZ
• Tuscan, AZ
• San Antonio, TX
• Austin, TX
• Huston, TX
• Dallas/Ft. Worth, TX
• Oklahoma City, OK
• Tulsa, OK
• Kansas City, MO-KS
• St. Louis, MO
• Indianapolis, IN
• Milwaukee, WI
• Chicago, IL, WI, and IN
• Grand Rapids, MI
• Detroit, MI
• Minneapolis, MN
• Cleveland, OH
• Columbus, OH
• Cincinnati, OH
• Louisville, KY
• Nashville, TN
• Memphis, TN
• Birmingham, AL
• Atlanta, GA
• Charlotte, SC
• Raleigh-Durham, NC
• Virginia Beach, VA
• Richmond, VA
• Baltimore, MA
• Wilmington, NC
• Pittsburgh, PA
• Philadelphia, PA
• Hartford, CT
• Providence, RI
• Jacksonville, FL
• Orlando, FL
• Tampa, FL
• Miami, FL

[AJ Wong]

HI my name is AJ and I'm a broker with Vacasa that primarily works with investors. I'm aware of several multi unit properties in Salem and beyond at your desired price point and projected returns. One is pre-listing on two tax lots, composed of 7 units, detached homes and duplexes. Feel free to contact me for more details.