Ready to start investing into rental properties
New to Real Estate · Dallas · Member since 2023 · 16 posts · 7 votes
Hello, I am new to real estate and property management. I would like to start investing in multi-family rental properties. I am a total beginner. I have a decent amount to invest and great credit currently. Also have a house and land in Mississippi that was inherited, that I am looking to invest into. Any advice or options available would be wonderful. Looking to start immediately. Located in the Dallas/Fort Worth area of Texas.
Hi Grozie, my advice (if you want to be an active investor) is to start with a residential multifamily property (2-4 units) which you can househack and use to learn the ropes. Starting with a commercial multifamily (5+ units) is not impossible but does come with more risk if you don't know what you are doing and requires of course more funds. You can also of course invest passively in a multifamily syndication if you have plenty of funds to invest but not as much time to run properties.
Hi Grozie, my advice (if you want to be an active investor) is to start with a residential multifamily property (2-4 units) which you can househack and use to learn the ropes. Starting with a commercial multifamily (5+ units) is not impossible but does come with more risk if you don't know what you are doing and requires of course more funds. You can also of course invest passively in a multifamily syndication if you have plenty of funds to invest but not as much time to run properties.
In addition to the advice above, do your due diligence on the operators. It is as much - if not more - an investment in the jockey not the horse.
Also, analyze how they arrived at their projections. For example, did they project a quick sale at today’s cap rates with aggressive rent appreciation and 2021 occupancy levels built in? Or, did they add .5-1 point to the cap rate and project more conservative rent appreciation and occupancy?
Welcome to BP!
Hi Grozie, my advice (if you want to be an active investor) is to start with a residential multifamily property (2-4 units) which you can househack and use to learn the ropes. Starting with a commercial multifamily (5+ units) is not impossible but does come with more risk if you don't know what you are doing and requires of course more funds. You can also of course invest passively in a multifamily syndication if you have plenty of funds to invest but not as much time to run properties.
Ok Thankyou for the wonderful advice, what would be the risks associated with commerical multi family, and how much funds would I need to possible try this or syndication? If I could possibly talk with you one day privately I would like that as well.
In addition to the advice above, do your due diligence on the operators. It is as much - if not more - an investment in the jockey not the horse.
Also, analyze how they arrived at their projections. For example, did they project a quick sale at today’s cap rates with aggressive rent appreciation and 2021 occupancy levels built in? Or, did they add .5-1 point to the cap rate and project more conservative rent appreciation and occupancy?
Welcome to BP!
Ok Thankyou very much, can I just ask them for these statistics or is there a database to learn all of this?
I like the house-hack idea as well, just start small...don't get in over your head right away, this game can get complicated.
Start with a nice duplex or triplex, stay away from full-on commercial just yet....
I like the house-hack idea as well, just start small...don't get in over your head right away, this game can get complicated.
Start with a nice duplex or triplex, stay away from full-on commercial just yet....
Ok I understand, how long have you been house hacking? And what was your biggest issue in the beginning?
Hey Grozie,
I would take a small step into the RE investing world and it sounds like you have a few options. As others here have, I would recommend a house hack. Buying a 2-4 unit property and living in one unit. This is a great way to get into learning about real estate and managing a property. What are you doing with the property in Mississippi? Is this currently a rental?
Hello, I am new to real estate and property management. I would like to start investing in multi-family rental properties. I am a total beginner. I have a decent amount to invest and great credit currently. Also have a house and land in Mississippi that was inherited, that I am looking to invest into. Any advice or options available would be wonderful. Looking to start immediately. Located in the Dallas/Fort Worth area of Texas.
Hey @Grozie Thomas,
Welcome to BP and to the wonderful world of multi-family investing. Like anything it is a process to learn. My first question is do you want to own real estate or do you want to be a property manager?
With smaller 2-4 unit props, you can live in 1 unit and rent the others to offset your mortgage while you learn small property management. The more units you add, the nuances and challenges of PM come into play.
Smaller 2-4 unit props also have better financing terms through conventional lenders than 5+ that have to go through commercial lending (you will need some experience for those loans, in most cases).
Syndications are definitely an option for a truly passive real estate investor wanting a solid return and to own a % of the asset. It was mentioned earlier that you invest in the jockey, not the asset. Be sure your general partnership team knows their stuff.
It's a great decision to start young and build for the future! Real estate is a long game and great wealth can be built with a solid strategy. I strongly believe that you collect real estate and don't trade it.
Happy Holidays!
I would echo @Jonathan Nichols and @Michael Margarella on house hacking a small multifamily if you want to get into active investing. It's great experience, and of course you eliminate your housing payment if you do it right. Alternatively, you can house hack with housemates or an ADU.
But it's worth noting that you don't necessarily need a ton of money to invest passively in real estate syndications. If you go in on syndication deals with others as a member of a real estate investment club, you can invest with relatively small amounts. For example, in our Co-Investing Club we meet once or twice a month to vet deals, and members can go in on them together with $5K apiece.
Personally, I no longer buy properties directly. I spread small amounts of money across many passive investing deals. You get all the benefits of real estate (cash flow, appreciation, tax benefits) without any of the headaches of landlording or asset management.
House hack! Best way to actively learn how to manage real estate as a beginner.
Hello, I am new to real estate and property management. I would like to start investing in multi-family rental properties. I am a total beginner. I have a decent amount to invest and great credit currently. Also have a house and land in Mississippi that was inherited, that I am looking to invest into. Any advice or options available would be wonderful. Looking to start immediately. Located in the Dallas/Fort Worth area of Texas.
Hey @Grozie Thomas,
Welcome to BP and to the wonderful world of multi-family investing. Like anything it is a process to learn. My first question is do you want to own real estate or do you want to be a property manager?
With smaller 2-4 unit props, you can live in 1 unit and rent the others to offset your mortgage while you learn small property management. The more units you add, the nuances and challenges of PM come into play.
Smaller 2-4 unit props also have better financing terms through conventional lenders than 5+ that have to go through commercial lending (you will need some experience for those loans, in most cases).
Syndications are definitely an option for a truly passive real estate investor wanting a solid return and to own a % of the asset. It was mentioned earlier that you invest in the jockey, not the asset. Be sure your general partnership team knows their stuff.
It's a great decision to start young and build for the future! Real estate is a long game and great wealth can be built with a solid strategy. I strongly believe that you collect real estate and don't trade it.
Happy Holidays!
Great advice! I definitely am wanting to do both, but I believe property management is the best option for me to start out on. I’ve always been afraid of syndication and crowd funding, it makes me feel that investors are scared to invest in that specific property for one reason or another.
I would echo @Jonathan Nichols and @Michael Margarella on house hacking a small multifamily if you want to get into active investing. It's great experience, and of course you eliminate your housing payment if you do it right. Alternatively, you can house hack with housemates or an ADU.
But it's worth noting that you don't necessarily need a ton of money to invest passively in real estate syndications. If you go in on syndication deals with others as a member of a real estate investment club, you can invest with relatively small amounts. For example, in our Co-Investing Club we meet once or twice a month to vet deals, and members can go in on them together with $5K apiece.
Personally, I no longer buy properties directly. I spread small amounts of money across many passive investing deals. You get all the benefits of real estate (cash flow, appreciation, tax benefits) without any of the headaches of landlording or asset management.
What would be cons to doing this? And what is the earning potential of syndication? Just been afraid to try it from hearing bad reviews.
Hello, I am new to real estate and property management. I would like to start investing in multi-family rental properties. I am a total beginner. I have a decent amount to invest and great credit currently. Also have a house and land in Mississippi that was inherited, that I am looking to invest into. Any advice or options available would be wonderful. Looking to start immediately. Located in the Dallas/Fort Worth area of Texas.
Hey @Grozie Thomas,
Welcome to BP and to the wonderful world of multi-family investing. Like anything it is a process to learn. My first question is do you want to own real estate or do you want to be a property manager?
With smaller 2-4 unit props, you can live in 1 unit and rent the others to offset your mortgage while you learn small property management. The more units you add, the nuances and challenges of PM come into play.
Smaller 2-4 unit props also have better financing terms through conventional lenders than 5+ that have to go through commercial lending (you will need some experience for those loans, in most cases).
Syndications are definitely an option for a truly passive real estate investor wanting a solid return and to own a % of the asset. It was mentioned earlier that you invest in the jockey, not the asset. Be sure your general partnership team knows their stuff.
It's a great decision to start young and build for the future! Real estate is a long game and great wealth can be built with a solid strategy. I strongly believe that you collect real estate and don't trade it.
Happy Holidays!
Great advice! I definitely am wanting to do both, but I believe property management is the best option for me to start out on. I’ve always been afraid of syndication and crowd funding, it makes me feel that investors are scared to invest in that specific property for one reason or another.
You definitely learn a lot managing properties. You'll learn about late rent, evictions, bed bugs, roaches, Sect 8 vouchers, clogged toilets, etc. So much fun. I managed my own up to 5 units and then built a small PM company (64 units for 8 owners) for 3rd party mangement a few years back. Oh the lessons...lol I'm forever grateful I did as I learned so much behind the scenes that I wouldn't have seen otherwise.
Sometimes the best way to learn is by doing.
Syndication and Crowd funding are different animals in their own right. My first syndication deal was over 200 units and I could not have funded that deal on my own, not even remotely close. It took pooling our collective resources to put that deal together. We are working on our 4th one now and they are very different indeed. Making sure you understand the asset manager / sponsorship team and their track record is important as they are the one's handling the actual management of the project.
Definitely agree with the posts above. Househacking is the best way to get started in Real Estate. Can't imagine a better deal than paying little to none for rent and building equity at the same time. Just live in the property for minimum 1 to recommended 2 years (while renting out bedrooms / units) and you'll know first hand how powerful real estate investing can be!
Hello, I am new to real estate and property management. I would like to start investing in multi-family rental properties. I am a total beginner. I have a decent amount to invest and great credit currently. Also have a house and land in Mississippi that was inherited, that I am looking to invest into. Any advice or options available would be wonderful. Looking to start immediately. Located in the Dallas/Fort Worth area of Texas.
Hey @Grozie Thomas,
Welcome to BP and to the wonderful world of multi-family investing. Like anything it is a process to learn. My first question is do you want to own real estate or do you want to be a property manager?
With smaller 2-4 unit props, you can live in 1 unit and rent the others to offset your mortgage while you learn small property management. The more units you add, the nuances and challenges of PM come into play.
Smaller 2-4 unit props also have better financing terms through conventional lenders than 5+ that have to go through commercial lending (you will need some experience for those loans, in most cases).
Syndications are definitely an option for a truly passive real estate investor wanting a solid return and to own a % of the asset. It was mentioned earlier that you invest in the jockey, not the asset. Be sure your general partnership team knows their stuff.
It's a great decision to start young and build for the future! Real estate is a long game and great wealth can be built with a solid strategy. I strongly believe that you collect real estate and don't trade it.
Happy Holidays!
Great advice! I definitely am wanting to do both, but I believe property management is the best option for me to start out on. I’ve always been afraid of syndication and crowd funding, it makes me feel that investors are scared to invest in that specific property for one reason or another.
You definitely learn a lot managing properties. You'll learn about late rent, evictions, bed bugs, roaches, Sect 8 vouchers, clogged toilets, etc. So much fun. I managed my own up to 5 units and then built a small PM company (64 units for 8 owners) for 3rd party mangement a few years back. Oh the lessons...lol I'm forever grateful I did as I learned so much behind the scenes that I wouldn't have seen otherwise.
Sometimes the best way to learn is by doing.
Syndication and Crowd funding are different animals in their own right. My first syndication deal was over 200 units and I could not have funded that deal on my own, not even remotely close. It took pooling our collective resources to put that deal together. We are working on our 4th one now and they are very different indeed. Making sure you understand the asset manager / sponsorship team and their track record is important as they are the one's handling the actual management of the project.
You may have already mentioned it, but Do you offer mentorship?
I would echo @Jonathan Nichols and @Michael Margarella on house hacking a small multifamily if you want to get into active investing. It's great experience, and of course you eliminate your housing payment if you do it right. Alternatively, you can house hack with housemates or an ADU.
But it's worth noting that you don't necessarily need a ton of money to invest passively in real estate syndications. If you go in on syndication deals with others as a member of a real estate investment club, you can invest with relatively small amounts. For example, in our Co-Investing Club we meet once or twice a month to vet deals, and members can go in on them together with $5K apiece.
Personally, I no longer buy properties directly. I spread small amounts of money across many passive investing deals. You get all the benefits of real estate (cash flow, appreciation, tax benefits) without any of the headaches of landlording or asset management.
What would be cons to doing this? And what is the earning potential of syndication? Just been afraid to try it from hearing bad reviews.
Syndications typically target 15-30% annualized returns. The main con is the high minimum investment ($50-100K if you don't invest with others as part of an investment club). Other cons include lack of liquidity and long-term commitment (3-7 years). And of course they come with risk, like any investment. High interest rates have pushed exit cap rates higher, which has made the last year or two a challenging time for existing syndication investments. I personally don't believe the risk is any higher than investing in stocks, but the typical returns are higher. Hope to see you at our next Co-Investing Club meeting to review deals together!