I have a question...I've been a SFR flipper for some years now while holding a full time job...basically haven't had many real days off for years. So you can kind of say I am tired. I have never indulged in multi-family but I do have some cash amassed. To all you experienced multi-family investers, in todays market at todays prices, is it possible to buy several, say, 4plexes, that will cash flow to add up to monthly retirement income. I am not really looking for appreciation gain more monthly cash flow. Like first two doors cover all costs and last two doors provided cash flow per 4plex unit. I basically want to do nothing!...well ok, I will do some of the minor repairs, but I do plan on using property managers. I know back in the "08" era you could easily buy great deals but, in todays market can it be done without looking for the proverbial "needle in the haystack"?
@Vincent Hawkes What are the numbers of the mutlifamily properties that you have seen? Try doing some calculations.
Hi @Vincent Hawkes . I'm on the mindset that there are always great deals out there as long as you know what you are looking for. It sounds like you are looking for a turn-key deal (new construction, or one that's already renovated). I'd suggest putting some additional thoughts into what kind of returns you desire (cash-on-cash return, cap rate, IRR, etc). You won't find these deals, unless you know what you are looking for. Then, begin building your team, starting with a property manager. While you are screening them, leverage their local market knowledge. They will be able to tell you all sorts of things, such as: 1) what property features and amenities will get you the highest rents in the area; 2) what areas are up-and-coming, and which ones to avoid; 3) they may even already manage a property for an owner who is looking to sell.
Great suggestions and thank you. Especially since I was considering out of state/area investing. I basically have about $450K of cash that I have built up from my flips. As you can tell im not very familiar with investing in multi-family. I was just throwing around the idea, if I could take the cash and and divide it up to say 5 or so down payments for financing of the 4-plexs in say higher end class B type turnkey properties. Which would then result in say a cash flow of say $7000/mth( 5 units X $1400....two units rent cash flow per 4plex), that could be added to the 401K monthly width drawl for a comfortable retirement income...Ultimately the units would end up in my kids hands since I would want to keep the units for cash flow until my wife and I were to pass. I fully understand the vacancy rate and maintenance cost influence on the cash flow but was wondering if 4plexs can still be purchased where the average monthly cost can be covered by the first two doors leaving the other two doors to cash flow. What little I have looked at seem to suggest that prices have escalated to the point where this type of cash flow situation is hard to come by. Hence the original question of my first post.
Like Mark pointed out above, you can always find good deals (in other words cash flowing properties) in SFR or multi-family markets, turnkeys or otherwise. Real estate in the US has definitely rebounded since the crash, but if you have a good team, you can still find great deals.
Another strategy that I've seen people be very successful with is to keep their flips as rentals. You have tremendous experience in your market with finding and rehabbing properties, while minimizing your costs. Keeping your flips as rentals instead of selling them would allow you to build your rental portfolio rather quickly since you already must have existing acquisition channels and the rehab teams.
Just another suggestion as opposed to trying something you're not experienced with.
I would seriously doubt achieving positive cash flow of $7000/month on only 5 properties is realistically attainable but it would depend entirely on your market.
Thanks guys , that's why I asked the experts! Anton, I've thought of leveraging my flips and I can get cash flow from them. The issue with texas is the property tax levels are some of the highest in the nation. It takes a good bite out of what could be cash flow, but it can still be done. Greg, I agree, it was a hope and a prayer that I could leverage my cash into assets with sizable cash flow to add to what I will be getting from my 401K. My lack of experience with multi-family shows but it doesn't hurt to explore the possabilities!
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