I've been invesing in SFH for about 7 years and would like to get into my first large MF property have about 12 properties with 14 doors total). I've also been wholesaling a few years and doing a SFH rehab here and there.
I've been listening to many of the BP podcasts and what did and din't work for others. I always enjoy listening to them on my flashdrive while driving around. Loaded with good tips and information. I can relate to a lot of it.
I have from $100k+ of my own funds (maybe more) but I want to get into 40-50 units so I can have an onsite property manager and maintenance person.
Any tips of what I can be doing now to prepare for a MF property over the next 6-12 months?
I know the area is obviously a huge big deal, like with SFH. Any tips would be greatly appreciated. I'm patient so if I have to take several steps now to be ready in 12 months I'll do it.
Its important to prepare one's mind first, and then the reality will follow (assuming one is willing to take action). So that's where I'm at now.
" Any tips of what I can be doing now to prepare
for a MF property over the next 6-12 months "
I would suggest going through @Joe Fairless
and @Joel Owens biggerpockets threads.
Good luck with your future investments
I would also recommend @Ben Leybovich biggerpockets threads
@Robert Shoffner - how exciting! Congrats on taking the big next step to multifamily. With your background in single family homes, I'm going to assume you already have a market identified. So, using that assumption, I recommend you run the #s on 100 sample properties in that market. You can find them on LoopNet, broker websites, etc. The purpose of the exercise is to gain a good understanding of:
- price per unit
- cap rates
- being familiar running numbers so you can do it very quickly
- identify any terms you're unaware of
- see which amenities are being offered in your market
- see the types of deals being offered
There's plenty more to do (especially if you end up doing deal syndication but it doesn't sound like that's a focus of yours) but that would be my next step if I were you.
@Jenkins Ramon thx for the shout out!
Congratulations on setting some great goals. A few things to note...
I'm not sure where you are located or what class of properties you are going to pursue however 40-50 units isn't generally enough for on-site property management. Depending on rent levels and property location it generally takes 70-100 units to pay for 1 full time person on-site. At rent levels around $500/unit you would be better off having an on-site PM that can handle leasing and small maintenance items (at 70-100 units). That combination can be hard to find (that actually do both well).
Also with only 100k in cash you would need to partner with another investor or syndicate the deal to properly fund the transaction and account for the proper amount of reserves at the 40-50 unit level.
Just a few things to think about as you are planning the transition.
- Start connecting with the Property Managers in your area that manage the class and size of property that you are seeking.
- Start connecting with local and regional banks that fund these type of transactions (you might already have one). These relationships can be hard to break into...but once you have your first deal completed with the bank they become much easier.
- Start networking with all of the brokers that deal in the property size and areas that you are seeking. Try to meet each one at their office, for coffee, or for lunch. Follow up constantly. Getting in the deal flow is one of the hardest parts of breaking into the 50+ unit mix (especially right now).
- Depending on where you are located join the apartment association group in your area. You will be able to network with other multi-family owners which can be extremely helpful.
Thanks for the shout-out @Jenkins Ramon
40-50 units doesn't work very well - too small. @Robert Shoffner You say you want to go bugger so that you can have on-site personnel. If you study enough financials you'll begin to realize that the expense of a Full Time employee runs in the range of $400/door, plus or minus, and that the ratio of 1 FT to units is about 40. This makes it very difficult on a building this size.
40-50 units will require self-management in a lot of ways. You want this job?
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