Residential Real Estate Broker · Delray Beach, FL · Member since 2015 · 43 posts · 14 votes
I have 250k to invest......
Should I use that as a DP for a 10-12 unit property?
-OR-
Leverage with other investors to jump directly into something bigger like a 40-50 unit?
I have property management experience as I’ve owned 14 single family rental properties for over five years now...... but no experience managing it all under one roof.
Thoughts?
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Carlos Casanueva Do you want to lead or participate in a commerical multifamily as an LP?
Either way I’m a “roll your own” kinda guy. I like the control of owning my own. I don’t want to have to justify preventative maintenance costs to LPs, don’t want to be forced to sell based on a timeline for returns, etc. And I want all of the tax benefits 😀
But if I did invest I’d want someone to have owned or led a previous syndication with comparable magnitude. I don’t know that I’d hand my money over to someone who has owned/managed SFRs to acquire and run a 50 unit complex. It’s not rocket science but it adds risk to the deal. But that’s just me.
Investor · Dallas, TX · Member since 2016 · 168 posts · 195 votes
8y
@Carlos Casanueva Yes, we currently have 2600 units. We have sold some others, but the problem now is if you sell, you have to find another deal to put the money into. There is nothing wrong with selling, but I like the strategy of doing a refi or a supplemental loan (if possible). That way you can pull your cash out tax free (verify with our CPA) and still own the property.
The market is hot for sure. But, for larger properties, we are seeing some properties that have 40+ tours and 30+ offers. So, while the 10-12 units can be competitive, they are less competitive than the larger properties.
If you are trying to find larger deals with no track record, it will be a big challenge. You need to find someone you can team up with so you can leverage their track record. My husband and I actually did a short video (less than 3 minutes) about this (https://www.youtube.com/watch?v=tU_rXk2uRLc) if you want to check it out.
And, if you are going to raise money from others, you will want to make sure you understand the legal aspects. There are strict rules on what you can/cannot do.
Our smaller properties...we bought them even after we had large properties. Looking back, I wish we didn’t buy them because they are a distraction. We just sold one of the 8-units. The other one we are doing a refi on.
BTW...my husband Mark and I will be at the Real Estate Guys Event as well...let’s meet up.
Investor · Birmingham, AL · Member since 2020 · 32 posts · 26 votes
5y
Bringing up an old thread. what did you end up doing? I currently have quite a bit of commercial (40k sqft) medical space. I exited from another business and want to put about $200-250k into multi family. I want to cut my teeth solo if possible before risking other peoples money.
@Thomas Willingham I hope @Carlos Casanueva bought the largest property he could!
Hope so. I'm thinking with $250k and great banking relationships from my previous business, I can get into a $1m project, BRRR it and then look bigger. I'm at a point where I could just do passive, but that's not how I roll. If I'm going to do something, I'm all in. The other option is to get in o a syndication that would serve as a mentor ship.
Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
5y
@Thomas Willingham
I am always of a proponent that if you can buy it yourself, you should! If you are confident in your abilities and know that you will make a good profit, it’s always going to be better buying a property 100% with your own money. We still buy multifamily properties outright along with syndicating some as well.
But when you don’t have the cash to take down a good deal, we’re always in the mindset of the saying “10% of something is better than a 100% of nothing.”