What should I do next?
Hi All!
This is my first post so I apologize if its in the wrong spot and for the length. I need some advice on how to proceed with multifamily investments. Any and all advice welcome!
My story:
Back in 2011 my business partner (also my longtime best friend) and I decided that we wanted to venture into the world of real estate investing. We decided we wanted to use a buy and hold strategy involving multifamilies <4 units to decrease any risk. After multiple months of following the local Denver market, extensively reading multiple books, we decided to use an FHA loan to purchase a fully rented 4 family property with a large 3 car garage in the Baker neighborhood of Denver that was in need of rehab.
We purchased this property for under his name at 3.5% down (~$14,000), total purchase price of $360,000. The appraisal at the time valued the house for $390,000. From the beginning the property cash flowed slightly over $1000 a month with him occupying one fo the rents. After about 2 months we decided that since this property was going to be ours for a while, we would start making upgrades to the units and the property in general.
The property has only seen vacancy when we chose do a complete remodel of the unit. Even during the construction with 1 unit vacant we were still cashing flowing (~$300). I know the popular opinion would be to just sit on it and collect cash but we wanted to get our hands dirty and rehab the property from a C level property to >= B+. Over the last 2 1/2 years we performed, with blood , sweat, and tears multiple renovations to property totaling about $50,000 (both profits from cash flow and our own money) and have turned this property into a low A property. Throughout this time we gained valuable lessons on landlording/ property management, rehabbing, and real estate in general.
Fast forward to current times. The property is currently cash flowing $1600/ month and would easily put us around $2200/ month if it was not for my business partner and I occupying 2 of the units (we are both paying well below current rent for the area). The property is now sitting in an investment loan with around $340,000 left on the note and is under an LLC. The property is appraised at $500,000 as of few weeks ago during the refi process. We have about $25,000 in cash and can also use our HELOC on the property ($111,000 at 4.25% with 3 rate locks if we choose to utilize them).
We want to stay local (greater Colorado area, specifically Denver, Boulder) but have considered looking more into midwest larger unit properties. We are a little nervous venturing outside of this area as we are familiar with the markets here and don't have experience with this type of venture. We are currently debating getting 2 more 4 plexes (1 under his name and 1 under mine) and trying to repeat the same process, albeit more streamlined and not with some of the rehabbing mistakes (bad contractors, permitting issues etc.) that held us up with with the first one.
Keeping in mind that our overall goal is to expand the portfolio and cash flow, we would like eventually get into larger apartment complexes and start a more formal property management company. I was hoping for some advice on how to be successful in working towards our goals.
Thanks for your time and expertise!