My first multi family buy and hold/house hack strategy

Multi-Family and Apartment Investing
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My first multi family buy and hold/house hack strategy

Ricky Williams
Dedham, MA · Member since 2016 · 4 posts · 0 votes
so for the past five months i set out on the hunt for a foreclosure but it had to be a multi because the plan is to stay independent with no mortgage was the only way for me to succeed at trying to make it i want to own and manage all my own properties i don't want to sell anything buy and hold i strongly believe passive income is the best way to build capitol and build wealth to grow  sooooo finally after these long hard stressful five months were i was only able to find only 5 house that could work and that i could afford for my situation that i was looking for and losing bidding wars to people with more money than me and everytime the bank said submit your best and final and my realtor calling me and telling me you didn't get it .... i was deeply discouraged that the reality was i didn't have enough money to land a bargain because affordable cash deal was selling fast cause everyone is looking to invest right now      but god answer my prayers and i was able to submit a offer on a house that was listed for 150K and after going back and fourth with my realtor and bank they finally agreed to a purchase price of 125k for a triplex 3600 sq. with also a inlaw unit that i could also rent out for making it a total of 4 units i can't believe it i am undercontract so i hired a real estate attorney to handle the deal and i am currently waiting for company to come out and dewinterize the house so i can do a walk threw with my contractor who is my old boss and friend and then i will be getting a home inspection i believe and moving forward to signing a purchase & sales agreement i don't have a exact closing date yet but i am expecting to do a 14 day close  also the house needs a lot of work and its in a b /b- neighborhood and i have to do tons of renovating but i still have a cushion to get some renovations done  125k purchase price +50k brings all the mandatory stuff i need up to code electric/plumbing/boiler/ etc ... and renovations  i will be into it for 175k is the plan  25k left over as my pincushing  but remember i will be house hacking so i will be living there and perform most of the renovations i can myself and i will do over units that i can with my budget so i can bring in rents The number one thing is i don't have a mortgage so i won't be under pressure with a mortgage payment every month and this would be a great starting point to build capitol for next rental multifamily investment   i will only have to worry about land taxes+homeowners insurance+plus water cost  i would like any feedback if any thoughts and advice from experience people and also opinions  on my strategy here and once again thanks for taking the moment to chime in on my experience ....    4 unit 3bd/2bd/2bd/1bd-studio 3bd in that town rents between 1000-1500 2bd rents between 900-1300 1bd and studio rents between 750-1200 this property is a potential win  please get back to me with any positive thoughts 
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  • Ricky Williams
    OP
    Dedham, MA · Member since 2016 · 4 posts · 0 votes
    9y
    Wow I posted this twice and no replies but if I posted and said I have no money and I'm looking to buy a multi everyone would chime in with a personae I am seriously starting to wonder about this site I can't any feed back or input on my strategy?????!!
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  • John Leavelle
    Investor · La Vernia, TX · Member since 2015 · 1k+ posts · 865 votes
    9y

    Howdy @Ricky Williams

    First, congratulations on getting started.

    Don't know why anyone else has not replied yet.  I just got on and going through daily emails.  Just got to your post.

    From the first scan the post does seem a little busy.  Might be confusing what you are asking.

    Obviously the deal should Cash Flow since you have no mortgage.  I will ask a few basic questions to clarify the quality of the deal. 

    Have you established an ARV for the property based on comps?

    What are the rent rates you are planning to start with?  Projected income?

    Have you determined your Operating Expenses?  What are your Cash Flow projections?

    How long are you planning to live there?

    Are you planning to use the same strategy for future deals?  All cash or are you will to leverage deals?  

    Hope you have great success.

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  • Ricky Williams
    OP
    Dedham, MA · Member since 2016 · 4 posts · 0 votes
    9y

    thanks for the responding john 

    based on the comps around the neighborhood my property ARV is between 300-350k when I'm done and the market is climbing slowly so who's knows what it would be worth in 5-10 yrs hopefully more

    i plan to rent out 3 of the units and live in the 4 unit for 1-2 yrs and bank rents and manage property myself i don't have a exact concrete number on operating cost yet but i predict i will be bringing in anywhere between 3200-4000 dollars a month in rent and then also my unit when i move would bring in more income 

    my strategy goal is to put the money away as income and then apply for a fha loan for my next property take advantage of 3-5% down and buy another 3-4 unit multi family and live there and grow my portfolio by owning and managing my own properties but i know on the third property i will have needed to put down 20-30 percent which would be fine because i have equity and assets and also options on what route i would like to take 

    my question you kind of already answered was is this a smart decision to go no mortgage route and assume so much risk by using up all of my funds to get in the game because sometimes when i talk to people they make it seem like I'm crazy for wanting to start out this route but i feel like if they had the opportunity to start out independent why wouldn't they go that route 

    if you know what I'm trying to say also i am a little nervous seeing that i am 29 and this will be my fist time taking on my on investment and running my own business and projects

    also any advice,pointers,tips any positive tips would be greatly appreciated 

    also on a side note on all my mechanicals for the house i will be buying everything that i can that comes with a energy saving rebate, boilers,water tank,thermostat, etc 

    i strongly believe in saving money and being energy efficient  on whatever i can 

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  • Bryan O.
    Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    9y

    @Ricky Williams I never saw your first post, but typing correctly (capitalization, punctuation, etc.) tends to get more responses because the post is easier to understand and follow, which makes it easier to respond. Recall that everyone on this site is here voluntarily giving away free information, many of them already financially free because of real estate. You are asking for their time, so make it easier for them to give it by spending some of your own to make your post "response-friendly".

    The idea is great, and using cash lets you close quickly. That is the right way for what you are trying to do. I assume you have a W2 job to have so much cash, but if not then you need to keep in mind how you are going to expand. Without pay stubs, banks do not look favorably on you. You will need to show 2 years of tax returns that show how profitable you are in your business(es) before they'll even touch you, which means you need to have your strategy right now on how to make sure you show profit. If you are writing off everything you can think of to keep taxes low, you may shoot yourself in the foot when you go to leverage this 4-unit, or get a loan on a new property. Keep that in mind with your strategy today so you will be good to go.

    Best of luck. It sounds like you are doing great already.

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