From SFH REI to MF REI (and potential partner sourcing)

[Brandon Beaudoin]

Good evening BP fam!

First post here but I've been plowing through the forum and articles. Long story short I'm (mostly) getting out of the SFH REI marketplace (I have 3 SFH rentals) and looking to branch into multi-family commercial properties. Shout out to Grant Cardone and his BP podcasts (yes, I've been flipped) for the extra motivation I needed.

I wanted to lay out my position below, seek some thoughts and feedback on options/approach and also test the water for any interest in partnering my first MF deal.

1. Selling 2 of my SFH rentals that are in great seller markets with anticipated closings no later than Sep or Oct at the very latest. Combined sales price will be in the $810k-860k range (depends if I do remodel on of the homes).

2. Sales will be 1031 exchanges. Looking at a local QI in San Diego, CA (Exiter 1031 a good possibility) but haven't yet talked to any

3. I should net ~$75k -$90k from the SFHs depending on final sales price and closing costs. That's about half the down payment I'd need for a 20% commercial loan on a like-kind property. I have ~800 credit scores and pretty substantial primary income (i.e. not self employed, have solid income history and a decent DTI).

4. Looking at 8-12 cap properties with no less than 8 doors in AZ, TX, FL, possibly OH and a couple others. Looking at properties in the $750-950k range (no mobile homes). NOIs north of $60k.

5. Willing to consider partnering with another investor but am also considering using a HELOC on my current primary residence to come up with remaining down payment.

Thoughts? Advice? Additional questions? Interest?

Thanks much and looking forward to hearing from the crowd!

B

[James Wise]

Originally posted by @Brandon Beaudoin:

Good evening BP fam!

First post here but I've been plowing through the forum and articles. Long story short I'm (mostly) getting out of the SFH REI marketplace (I have 3 SFH rentals) and looking to branch into multi-family commercial properties. Shout out to Grant Cardone and his BP podcasts (yes, I've been flipped) for the extra motivation I needed.

I wanted to lay out my position below, seek some thoughts and feedback on options/approach and also test the water for any interest in partnering my first MF deal.

1. Selling 2 of my SFH rentals that are in great seller markets with anticipated closings no later than Sep or Oct at the very latest. Combined sales price will be in the $810k-860k range (depends if I do remodel on of the homes).

2. Sales will be 1031 exchanges. Looking at a local QI in San Diego, CA (Exiter 1031 a good possibility) but haven't yet talked to any

3. I should net ~$75k -$90k from the SFHs depending on final sales price and closing costs. That's about half the down payment I'd need for a 20% commercial loan on a like-kind property. I have ~800 credit scores and pretty substantial primary income (i.e. not self employed, have solid income history and a decent DTI).

4. Looking at 8-12 cap properties with no less than 8 doors in AZ, TX, FL, possibly OH and a couple others. Looking at properties in the $750-950k range (no mobile homes). NOIs north of $60k.

5. Willing to consider partnering with another investor but am also considering using a HELOC on my current primary residence to come up with remaining down payment.

Thoughts? Advice? Additional questions? Interest?

Thanks much and looking forward to hearing from the crowd!

B

 Saw you were considering Ohio as a place to park some of your cash. If you do go into further research on the markets here in Ohio I recommend reading The Ultimate Guide to Grading Cleveland Neighborhoods as Cleveland is one of the more popular markets in Ohio for Out of State Investors. Always need to know the risk level of the neighborhoods you are buying in. Most important part of the game. 

P.S. 

If you do go out of state Cleveland or otherwise below are some best practices to keep risks as low as possible.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.