Using cash flowing SFH to get into apartments

Multi-Family and Apartment Investing
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Using cash flowing SFH to get into apartments

Jacob Grennell
La Mesa, CA · Member since 2018 · 6 posts · 1 vote

Hello everyone,

I'm curious if anyone has or is in the process of using SFM to get into apartment buildings.

I know alot of people that are getting SFM HOMES that cashflow 300-500 a month with tenants already in for around 100k. So I'm curious as to why people dont get like 10 of those with a 25% down within a 5 year timeline while still working their day job. The homes would be pretty simple to finance using a heloc from a personal residence or home equity loan. Once you get like two or three They would just reproduce down payments on their own. This would also boost your income allowing you to save more for an apartment complex. In my opinion you could save 100 to 250k for an apartment complex faster and it would boost your net worth and kind of start a track record for you to the bank and future investors. Use that money to get like a 10 or 20 unit. Go in add value you boost rents and cap rate and get out with a profit. You could then quit your day job to focus fully on apartments because you have your SFMs paying your expenses and you have the money from the previous deal to use on the next, then move up from there.

I know they are two separate ventures and dont work the same at all, however I think it's better then saving for seven to 10 years to do the same thing plus you would still have to work a full time job. Any opinions, advice positive or negative are welcomed and appreciated. Thanks for everyone time!

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    7y

    @Jacob Grennell Welcome to BP! I think get there by whatever way that works best for you and meets your goals. If you are investing in an area where those numbers can be attained go for it! I mean why not; if you can hit those numbers the worst that can happen is you end up with a bunch of money making SFR-if all goes well of course. SFH are easier to sell than MF and if they appreciate so much the better. Plus MF is crazy right now and the market may loosen up in the meantime. I say go for it!

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  • Matt Nusbaum
    Rental Property Investor · Annapolis, MD · Member since 2011 · 232 posts · 170 votes
    7y

    @Jacob Grennell that is one way to do it for sure and I know several people who have done just that. The only thing I would add is the time/headache that comes with managing those SFRs. Exiting those properties may prove to be more difficult as well. Typically the deals with $500 monthly cashflow are not in the most desirable neighborhoods. As you mentioned SFRs and apartments (especially large MF) as two completely different ventures and your credibility will likely not carry over. That said, as @Bjorn Ahlblad mentioned, whatever way works best for you and gets you to financial freedom go for it!

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  • Serge S.
    Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
    7y
    Originally posted by @Jacob Grennell:

    Hello everyone,

    I'm curious if anyone has or is in the process of using SFM to get into apartment buildings.

    I know alot of people that are getting SFM HOMES that cashflow 300-500 a month with tenants already in for around 100k. So I'm curious as to why people dont get like 10 of those with a 25% down within a 5 year timeline while still working their day job. The homes would be pretty simple to finance using a heloc from a personal residence or home equity loan. Once you get like two or three They would just reproduce down payments on their own. This would also boost your income allowing you to save more for an apartment complex. In my opinion you could save 100 to 250k for an apartment complex faster and it would boost your net worth and kind of start a track record for you to the bank and future investors. Use that money to get like a 10 or 20 unit. Go in add value you boost rents and cap rate and get out with a profit. You could then quit your day job to focus fully on apartments because you have your SFMs paying your expenses and you have the money from the previous deal to use on the next, then move up from there.

    I know they are two separate ventures and dont work the same at all, however I think it's better then saving for seven to 10 years to do the same thing plus you would still have to work a full time job. Any opinions, advice positive or negative are welcomed and appreciated. Thanks for everyone time!

     Thats pretty much the roadmap as to how I did it. Key was holding all the way through the recession and moving into apartments before the peak. Reverse those two and the picture looks very different.

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