Advice for new investor looking to buy multi-family properties

12 Replies

Greetings! 

My name is Jordan and I am an ESL teacher in the Appleton, WI and have been obsessed for a while now with reading and learning about all things real estate, specifically multifamily homes. I am getting married this March and my fiance and I are planning on buying a multi-family home to owner occupy in the Green Bay area. 

What 3 pieces of advice would you give a young married couple looking to start investing in multifamily properties? 

Regards, 

Jordan LeClaire

@Jordan D LeClaire  

  1. Have your wife onboard/open lines of communication
  2. Attend your local REIA/meetups and network with local investors
  3. Always trust your gut

Also congratulations on getting married soon. Best decision of my life!

Originally posted by @Jordan D LeClaire :

Greetings! 

My name is Jordan and I am an ESL teacher in the Appleton, WI and have been obsessed for a while now with reading and learning about all things real estate, specifically multifamily homes. I am getting married this March and my fiance and I are planning on buying a multi-family home to owner occupy in the Green Bay area. 

What 3 pieces of advice would you give a young married couple looking to start investing in multifamily properties? 

Regards, 

Jordan LeClaire

Just one piece of advice.  No matter what story you can tell yourself about future appreciation, hidden value, path of progress, gentrification, hot markets, hipsters moving into the neighborhood, or whatever other non-scientific, non-data-driven "evidence" in favor of why you should buy this non-cash flowing property now because the future prospects are great, DON'T DO IT.

Only buy for cash flow.  Don't buy property that you have to finance out of pocket because of some future return you tell yourself you're going to get that's going to make it all worthwhile.

Cash is King.

Check out Wiscoreia.com

@Jordan D LeClaire One thing is for sure, I don't know the dynamics of your relationship and pending marriage so take my advice as a grain of salt.  So here it is...

1.) One of you has to take the lead is vetting these properties. Someone has to be out there on the front lines, looking at neighborhoods, communicating with agents, touring quads, building pro-formas, etc. If you're going the BRRRR route, at least try and figure out what those rehab costs would be on the surface.

2.) The other person gets the liberty of tearing your deal points and assumptions apart as well as "veto power".  Whoever is doing #1 can't get their tender feelings hurt when the other says "What the heck do you know about replacing flooring?!?!? We'd have to hire a contractor!"

You'll be in a new marriage so odds are you'll both want to make each other happy.  That's awesome for a marriage but horrid for real estate.  You need to have different perspectives, you need someone to see the holes in the others logic/assumptions, etc.  

And what you *never* want to happen is to buy a piece of mediocre real estate because you two were worried about hurting each others feelings. Now if it's an SFR to live in, there's emotion tied to the purchase, you want to raise a family there, etc. then it's a completely different dynamic :-)

@Jordan D LeClaire

1. Re-read Jonathan’s post, then read it again. It’s easy to get emotionally involved and make excuses for why we can afford this house.

2. Learn how to screen tenants

3. Become familiar with the eviction process. Specifically, The timeline for when you are allowed to serve  papers. Know which attorney you will use so when the time comes the research is already done. You may or may not choose to use one but when the time comes you don’t want the added pressure of having to ask around. It’s much easier to just reach for the phone and dial.

4. Seek out and network with other investors and landlords. 

5. When you find your deal Post your numbers here to make sure you are not forgetting things like cap ex, closing cost, ins, etc.

Congrats on deciding to house hack. It’s a great way to start the wealth building machine.

Originally posted by @Jonathan Twombly :

Just one piece of advice.  No matter what story you can tell yourself about future appreciation, hidden value, path of progress, gentrification, hot markets, hipsters moving into the neighborhood, or whatever other non-scientific, non-data-driven "evidence" in favor of why you should buy this non-cash flowing property now because the future prospects are great, DON'T DO IT.

Only buy for cash flow.  Don't buy property that you have to finance out of pocket because of some future return you tell yourself you're going to get that's going to make it all worthwhile.

Cash is King.

 Sound advice for most of the country, but I gotta admit I am surprised that it's coming from a New Yorker. It seems like one of the few markets where buying anywhere will appreciate, eventually. Sorry, didn't mean to hijack this thread. Back to what we were talking about...

Make sure your wife is on board

Buy 3 or 4 unit buildings if possible

Make sure it is a cash flowing property after you move out. You may plan to be there for several years, but let one past the goalie and the wife may want to buy a house when the baby is born. 

-Be sure to add in every single expense and be realistic on the rent and vacancy rates. It's way too easy to forget expenses or not budget enough in reserves. Feel free to post some deals on this site. 

Having good team is very important. You need a good realtor, lawyer, and GC. Best of luck.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here