Questions Buying 1st Multifamily In Florida

[Edwin De leon]

( Note: Using Va Home Loan to buy Multifamily and will live in 1 apartment for 1st year ) 

My Goal: With this 1st Multifamily ... goal is cash flow and appreciation 

1) Considering Orlando area, but What areas of Florida should I consider buying my 1st 3-4 family house and why

2) If you were in my shoes as a 1st time multifamily investor what steps would you take to minimize costly mistake & maximize investment 

3) what book do you Recommend to read as a 1st time Multifamily Investor

[Ash Hegde]

Hi Edwin, sounds like you are making a great step with a multifamily house hack using your VA loan. I don't know the Orlando market so I won't comment on that one. I think tenant screening is one of the more important things for a new investor, so you are getting paid on time and your property isn't damaged. Brandon Turner has Multifamily Millionaire book that covers small multifamily up to large apartment buildings. Happy to connect and talk more if you'd like!

[Tyler Gibson]

Quote from @Edwin De leon:

( Note: Using Va Home Loan to buy Multifamily and will live in 1 apartment for 1st year ) 

My Goal: With this 1st Multifamily ... goal is cash flow and appreciation 

1) Considering Orlando area, but What areas of Florida should I consider buying my 1st 3-4 family house and why

2) If you were in my shoes as a 1st time multifamily investor what steps would you take to minimize costly mistake & maximize investment 

3) what book do you Recommend to read as a 1st time Multifamily Investor

When considering buying a house hack, you need to first evaluate what your personal goals are. Since you'll need to live there for at least a year you need to consider whether or not it's in a location that's going to be suitable to your lifestyle. Will be close enough to your job? Do you work from home and need a space for an office? If you have the ability to work remotely from anywhere there is some great markets in Central Florida where you can find multi-family opportunities. I suggest you find a local real estate agent that is familiar not only with VA but also house hacking and investing so that they can help you analyze the deal provides you information on potential rents and connect you with vendors you may need for any projects that come up.

[Carolyn Yates]

Location is tough to nail down without more input from you.  St Petersburg area has some great options for small multifamily.  I have heard others on the site mention Jacksonville as well.  Polk County between Tampa and Orlando is a very affordable option.  I was born and raised in the state and grew up just north of Orlando, but live now on the gulf coast.  I am glad to suggest other areas if you can offer more details on what exactly you are looking for - affordability, cash flow, close to employment centers, near the beach?  

[Justin Rademacher]

1st and foremost congratulations on jumping into real estate investing!

I have identified 3 things that are necessary to investing in real estate out of state: 1. Figure out what property type you are looking for. STR, LTR, small commercial etc. Looks like you already have this figured out so awesome! 2. Based solely on your criteria, research areas that support that goal. Look for vacancy rates, job growth, population size, population growth over the the last 10 years etc. This will help narrow down the market. Also pay attention to pricing in that area and the appreciation as these will be key indicators. 3.Find an agent in the area you are looking at. An agent who focuses strictly on investment properties will have the key relationships and knowledge to help you navigate the investment waters.

"The millionaire real estate investor" is a good book to help you get started. It was written by Gary Keller...Owner of Keller Williams.

I hope and trust this information is helpful!

[Bonnie Griffin Kaake]

@Edwin De leon While you are looking at multi-family properties for investment, consider the tax benefits available to real estate investors as well. Even if you are living in one of the units, you can still take advantage of cost segregation to increase your cash-flow and decrease your tax liability in those critical first years of ownership. Assessed land value versus building value can be a help or hindrance, you cannot depreciate land. I have seen resort and city properties with land values anywhere from 20% of your purchase price to 99.9% of the purchase price.  If you want more information, just let me know. 

[Wale Lawal]

@Edwin De leon

Start by learning as much as you can and working as an agent will give you lot of experience and knowledge.

Join real estate investment clubs.

Get in touch with a local agent or investor and shorten your learning curve and save you a lot of headaches as they tend to understand the market better.

The first book on my list is “Wealth Can't Wait: Avoid the 7 Wealth Traps, Implement the 7 Business Pillars, and Complete a Life Audit Today!” by David Osborn (Author), Paul Morris (Author) They shared an insight in their book not to follow what the so-called “expert” and gurus” say, rather, "Be Your Own Expert—Buy Real Estate"they said. One takeaway from their book is Asset-based living vs cashflow-based living. Another takeaway is about protecting yourself against the downside. We can all recall what happened in the last recession. You probably heard Warren Buffett’s famous quote: “Only when the tide goes out do you discover who's been swimming naked.

All the best!

[Joseph Stern]

@Edwin De leon

1. Tampa, Orlando, St. Petersburg

2. I would take whatever capital you have and find an extremely experienced investor/team in that space to partner with. From my experience, whenever I started a new niche such as flipping or Airbnb, I always ran into headaches that could have been avoided if I did my first project with an experienced partner or team such as realtor, gc, and lender who are all on the same page. If you partner with someone who has done it before on the deal your likelihood of being profitable raises tremendously .

3. Check out don’t buy multi fam, build it. Good read.

[Drew Sygit]

@Edwin De leon

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

Good luck with whatever you decide😊

Please send us any feedback via email, as we do not use the DM feature here.

[Stephen David Smith Jr.]

@Edwin De leon

First off I would like to commend you on the VA loan house hack approach.

I would look at Tampa-St. Petersburg-Clearwater. It gained 36,129 people in 2021, bringing its population to over 3.2 million. Four of the ten metro areas reporting growth in this category were in Texas. This added to all the businesses moving to that market bodes well for investment value and low vacancy.

For reading I would recommend a thorough financial modeling and underwriting book for multifamily real estate, in my opinion, this should be the foundation. If you would like to speak on the markets feel free to email me to schedule a call. My team and I work in the markets that are being discussed

[Drew C Grossman]

Hi Edwin!

#1) I have lived all over Florida, most recently Orlando where I graduated from the University of Central Florida. Because you mentioned BOTH cash flow and equity (appreciation, forced or market) I would seriously look into Ocala Florida. I have worked and analyzed deals in every part in Florida and have not come across a market with this amount of cash flow / equity upside. I’ve been investing here for the past few years. Currently building a handful of Duplex(s) for under 250k all in project cost with a market value of $425k when built. For reference they rent out for $1500+ a side / over $3000+ of gross monthly income per duplex. In this case for us, we are keeping as long term rentals because the cash flow is great however this may be a great market to house hack or Brrrr with the amount of forced equity day 1.

#2) I would try to find as specific niche, skill or market  and get really good at that thing. You will be amazed on the momentum you can build and I’ve found success on doubling down on what I already know vs trying to do to many things at once. This will allow you for form a strategy that works for you and your goals. 

#3) I have a lot of real estate book recommendations but none specific to mutli family investing. For me personally I’ve found that books tend to inspire me and light the necessary fire that’s needed to work towards a goal but I think finding a mentor that is already doing what your doing will be far more beneficial and accelerate what you are wanting to do!

Best of luck and keep me updated on how this plan works out for you!

[Edgar Rodriguez]

The first thing I suggest to any buyer is to do their own research. Some listings online only show "projected" rent and not the current rent. There is also rampant underestimation of maintenance costs. It happens all the time in the Tampa area. 

Next, in regards to area, it will really depend on you first. You have to figure out where you want to live. If you are indifferent to the location, I would suggest similar areas as others have posted below such as Pinellas County and Polk county because they have more of your desired inventory. 

[Adam Bartomeo]

As a fellow Vet and NY'er I got you covered...

1. Your best bet is to buy on the Southern Coasts (East or West) or the Orlando area. I would avoid any of the northern or Central locations. I like the West Coast a lot more than the East.

2. Hook up with someone who has lots of knowledge that they are willing to share. No matter what you buy MAKE SURE THAT IT WILL CASHFLOW from day 1 and on day 365. 

3. Books... I have read and listened to so many... multifamily is a tough one to say "Good". I always like Cashflow Quadrant but that isn't a multifamily book. As a new investor I would probably point you towards the Bigger Pockets podcast. Fantastic for new investors.