Looking to Invest in a Multifamily, Somewhere!

Multi-Family and Apartment Investing
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Looking to Invest in a Multifamily, Somewhere!

Alysha Johnson
Dallas, TX · Member since 2020 · 10 posts · 9 votes

Hey everyone! 

My family and I just purchased our first home here in the DFW area. With the market being as crazy as it is, purchasing this home was an absolutely insane process that thankful we made it to the end. Our goal now is to purchase our investment property, preferably multifamily. However, I am nervous that DFW won't be the ideal place to find one. Does anyone have any advice on which markets are promising right now or what we should be doing to reach this goal? 

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Elizabeth M Williams
Real Estate Consultant · Member since 2019 · 83 posts · 63 votes
5y

@Alysha Johnson we live in Dubai, so trying to figure out where to invest was even more tricky from here, especially as I've been dealing with tenants for over 20 years, mostly from somewhere abroad. About a year and a half ago I started looking for rentals - I read books on buying properties long distance, and developed a great friendship with an Aussie BP member, who's based in NY (my husband is also Australian), all because our plan WAS to buy a bunch more rentals and use the income for our retirement. He owns over 20 rentals, and we were discussing buying some properties with him, which would have been lovely, a lot of work, but also something to do to create wealth. 

Someone, and I wish I could remember who, because I would thank them, suggested I consider multifamily syndication, especially as we live abroad (moving back to the US next year). Having grown up with a Dad and Grandma in real estate, owning rentals was all I ever considered. I was also the Sales Director for a real estate company here in Dubai, so real estate is really something I'm passionate about. 

Long story short, I switched gears and spent nearly 2 months on long calls with syndicators, 2 CPA's, investors, capital raisers, and a lawyer, before not only investing in one (in Dallas, as it happens), but also going so far down the rabbit hole that I not only wanted to invest, but also wanted to introduce other people to MF syndications. Why? Because once I realized, after millions of questions, that it was a great way to make the same, if not more, money than I had been in rentals (I'm not a house flipper, nor a rehab and rent sort of person, was more a buy and hold investor), with the same tax advantages, gaining access to some of the hottest markets in the US, with syndicators doing way more data driven due diligence than I ever would as a landlord, then I wanted to shout from the rooftops for other people to hear about MF syndications, like I did. It really has been a big shift in headset for me, and I became an SEC Registered Rep, at 52, specializing in private placement capital in MF syndications, with a select few syndicators. 

You can find great opportunities in local markets, and I still get daily updates from Roofstock. But for me, and a lot of others (CBRE report says $148B investment into MF in 2021), MF investing has become the only way to get monthly income and participate in what's akin to a slow flip.

Just food for thought. Having spent tens of thousands on repairs over the years, I like the idea of still investing in real estate without dealing with tenants, repairs, and vacancies. We plan to sell our rental, and invest proceeds into 5 or 6 syndications. The advantage, too, is that if you buy in the right markets, you will be investing into growing job/population areas, where people will always need a place to live, and rents tend to be much cheaper in these markets than buying SF homes, so there will always be a demand, meaning low vacancy risks. 

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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    5y

    @Alysha Johnson, I would start with markets that are easily accessible, that you have ties to anyways. 

    And to be honest, most markets, big and small, are very competitive right now, so while the "cash flow" markets are still likely to yield better cash flow than other markets, they aren't yielding as much cash flow as they used to.  

    But back to markets that are accessible and you have ties to: a "good" investment these days seems to carry about $150/door of free cash flow after all property expenses and reserves.  You will likely want to visit said property at least 2 times per year.  Let's assume it is a 4 family, so $600/mo free cash flow.  If you have to fly to the property, rent a car, maybe it is an overnight in a hotel before heading home, you are going to be in that trip $1,000.  Twice a year, you are in $2k/yr in travel expenses, which are likely on top of your property expenses and reserves.  

    Now if the property is not a direct flight plus a 2 hour drive from the airport, it will be that much more time consuming to make a visit.  If you have family or regularly vacation in the area anyways, and would make that flight regardless, all of a sudden it makes more sense and the expenses become easier to justify.

    5Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    Kansas City ;). Most Midwest markets are perfect. I'd also look into the submarkets where you are at(not familiar with TX so don't know any)

    1Reply
  • Alysha Johnson
    OP
    Dallas, TX · Member since 2020 · 10 posts · 9 votes
    5y

    @Evan Polaski Wow! that's some very good advice! I just moved from Atlanta so perhaps that would be a good start.

    1Reply
  • Alysha Johnson
    OP
    Dallas, TX · Member since 2020 · 10 posts · 9 votes
    5y

    @Caleb Brown hmm I never thought of Kansas! I might have. to look into that one! Thanks a bunch! 

    2Reply
  • E. C. "Stony" Stonebraker
    Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
    5y

    @Alysha Johnson It depends on whether you want to be an active or passive investor or whether you want to grow into one or the other.  Even if you want to be active, you might find investing in a syndication in a larger multifamily might be a good way to learn more about the process and metrics involved.  

    Each market has different metrics which make sense in their submarkets, for the classes of properties, and the particular characteristics of the property.  Local brokers can help, especially if you find a good, reputable broker.

    @Evan Polaski has good advice on investing as an active investor starting out with smaller multifamily properties.

    There are tons of good books, podcasts, and both virtual and in person (again) conferences to learn more, ask questions, and meet potential advisors, contractors and other team members.  It's a team business!

    Call if you have specific questions or want other suggetions.

    Best wishes for successful investing!

    1Reply
  • William Costello
    Indianapolis, IN · Member since 2021 · 193 posts · 150 votes
    5y

    @Alysha Johnson have you ever thought about syndication? It is a great opportunity to get into multifamily particularly in the larger scale without having to do all the heavy lifting yourself. Good luck and congratulations! 

    1Reply
  • Andrew HoganPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 560 posts · 463 votes
    5y

    We're seeing a big shift of capital coming inland away from the coastal markets specifically to the Midwest. Good luck @Alysha Johnson!

    1Reply
  • Rick MartinPro Member
    Rental Property Investor · Redondo Beach, CA · Member since 2017 · 411 posts · 477 votes
    5y

    @Alysha Johnson I have heard that Mesquite can still offer some good value. Since you are from the Atlanta area, that gives you an unfair advantage there as well. How much of the work do you really want to do? Take it on full-time? If not consider investing in some syndications, passively. Then the entire map is open. We tend to focus in the SE and Texas.

    1Reply
  • Bryan MitchellPro Member
    Rental Property Investor · Columbus, GA · Member since 2016 · 634 posts · 337 votes
    5y

    @Alysha Johnson, I’d recommend looking 2 hours outside of DFW if you want to cash flow. The problem is the lack of inventory for MF. I’m assuming you are looking for 2-4 units. We’re both familiar with Atlanta so would you live in Atlanta and invest in Carrollton? What about Dalton? Lagrange?Think about how far you are willing to drive. I’m like the others and feel it’s important to check on the properties at least 2x yearly. Those smaller older towns do have some 2-4 units but not many and they have lower rents which is another discussion.

    2Reply
  • Justin Goodin
    Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
    5y

    @Alysha Johnson You should maybe look into some Midwest markets to find some affordable, smaller multifamily properties. 

    1Reply
  • Stephen Brown
    Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
    5y

    Hello Alysha. Many investors are coming to Ohio for multifamily properties because prices are still relatively low and rents are increasing. We have long term tenants and many opportunities as older landlords are getting rid of their portfolios.

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Alysha Johnson:

    Hey everyone! 

    My family and I just purchased our first home here in the DFW area. With the market being as crazy as it is, purchasing this home was an absolutely insane process that thankful we made it to the end. Our goal now is to purchase our investment property, preferably multifamily. However, I am nervous that DFW won't be the ideal place to find one. Does anyone have any advice on which markets are promising right now or what we should be doing to reach this goal? 

    Columbus, Ohio has seen a rapid growth in jobs and population. We also have solid cash flow.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Terri Wyzkoski
    Lender · Vienna, VA · Member since 2021 · 61 posts · 33 votes
    5y

    @Alysha Johnson

    If you and your family purchased your home in DFW, does that mean you just moved permanently there from Atlanta? I manage a portfolio of CRE investors whose investment strategy is diversifying assets from the MidAtlantic region (very low cap rates in our area), to the midwest and south in search ROI and ROE.

    That said, what's your overall strategy?  Are you seek to acquire an already-stabilized Class A or B MF asset? Or a Class B or C value-add MF asset?  Once you have that determined, then you can look at the inventory availability.

    3Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    5y

    I would recommend investing in Columbus OH it has great job opportunities and population growth here. 

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  • Elizabeth M Williams
    Real Estate Consultant · Member since 2019 · 83 posts · 63 votes
    5y

    @Alysha Johnson we live in Dubai, so trying to figure out where to invest was even more tricky from here, especially as I've been dealing with tenants for over 20 years, mostly from somewhere abroad. About a year and a half ago I started looking for rentals - I read books on buying properties long distance, and developed a great friendship with an Aussie BP member, who's based in NY (my husband is also Australian), all because our plan WAS to buy a bunch more rentals and use the income for our retirement. He owns over 20 rentals, and we were discussing buying some properties with him, which would have been lovely, a lot of work, but also something to do to create wealth. 

    Someone, and I wish I could remember who, because I would thank them, suggested I consider multifamily syndication, especially as we live abroad (moving back to the US next year). Having grown up with a Dad and Grandma in real estate, owning rentals was all I ever considered. I was also the Sales Director for a real estate company here in Dubai, so real estate is really something I'm passionate about. 

    Long story short, I switched gears and spent nearly 2 months on long calls with syndicators, 2 CPA's, investors, capital raisers, and a lawyer, before not only investing in one (in Dallas, as it happens), but also going so far down the rabbit hole that I not only wanted to invest, but also wanted to introduce other people to MF syndications. Why? Because once I realized, after millions of questions, that it was a great way to make the same, if not more, money than I had been in rentals (I'm not a house flipper, nor a rehab and rent sort of person, was more a buy and hold investor), with the same tax advantages, gaining access to some of the hottest markets in the US, with syndicators doing way more data driven due diligence than I ever would as a landlord, then I wanted to shout from the rooftops for other people to hear about MF syndications, like I did. It really has been a big shift in headset for me, and I became an SEC Registered Rep, at 52, specializing in private placement capital in MF syndications, with a select few syndicators. 

    You can find great opportunities in local markets, and I still get daily updates from Roofstock. But for me, and a lot of others (CBRE report says $148B investment into MF in 2021), MF investing has become the only way to get monthly income and participate in what's akin to a slow flip.

    Just food for thought. Having spent tens of thousands on repairs over the years, I like the idea of still investing in real estate without dealing with tenants, repairs, and vacancies. We plan to sell our rental, and invest proceeds into 5 or 6 syndications. The advantage, too, is that if you buy in the right markets, you will be investing into growing job/population areas, where people will always need a place to live, and rents tend to be much cheaper in these markets than buying SF homes, so there will always be a demand, meaning low vacancy risks. 

    6Reply
  • Austin Kay
    Member since 2021 · 24 posts · 8 votes
    5y

    I'm a beginning RE investor looking to get into MF as well. I currently have 2 rental SFRs.

    1Reply
  • Terri Wyzkoski
    Lender · Vienna, VA · Member since 2021 · 61 posts · 33 votes
    5y

    @Elizabeth M Williams. Really enjoyed your post, and I'm inspired and impressed by your journey from SFR investments to participating in MF syndications to getting SEC registered. You're a go-getter that I'd like to have in my network.

    2Reply
  • E. C. "Stony" Stonebraker
    Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
    5y

    @Elizabeth M Williams, it looks like you've traveled a path that many of us have traveled, although here in the USA.

    You're self-education through books and conversations makes a lot of sense and enables you to ask questions along the way to be sure you are comfortable with your own investment plan.

    The syndication is an investment vehicle that has for too long only been available to people in the know or part of the "club." Now, with so many books, educational videos and CRE conferences for anyone, many more people are learning about syndications and their many advantages.

    It is all part of becoming more financially literate which we hope for our investors so they can build multi-generational wealth and passive income for them and their families.

    2Reply
  • Elizabeth M Williams
    Real Estate Consultant · Member since 2019 · 83 posts · 63 votes
    5y

    @E. C. "Stony" Stonebraker yes, I love that people in their 20s are becoming more financially literate! Wish I knew then, what I know now. I really admire the fearlessness of some of the new RE investors, their drive to really understand it inside out. And thanks to the select group of syndicators who've managed to develop a great business model, it allows people like us, who prefer to create passive income streams, to reap the benefits with them. :)

    1Reply
  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Alysha Johnson:

    Hey everyone! 

    My family and I just purchased our first home here in the DFW area. With the market being as crazy as it is, purchasing this home was an absolutely insane process that thankful we made it to the end. Our goal now is to purchase our investment property, preferably multifamily. However, I am nervous that DFW won't be the ideal place to find one. Does anyone have any advice on which markets are promising right now or what we should be doing to reach this goal? 

     Hi Alysha, first off, congrats on your new home. I would recommend checking out the Columbus, OH market. There is a lot of development in the city and the housing market is crushing it. 

    2Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    5y

    Honestly, I would dig into the Dallas area, go up to Oklahoma City or hit some other solid growth markets near you. If that doesn't work, I wrote an article on the best multifamily markets earlier this year:

    https://www.biggerpockets.com/...

    Also, check out this article on what to look for:

    https://www.biggerpockets.com/...

    1Reply
  • Javaras Thomas
    Rental Property Investor · Miami, FL · Member since 2021 · 107 posts · 38 votes
    5y

    @Alysha Johnson I have a great market here in Florida if your are interested.

    1Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    Ill add to the Columbus Bandwagon, apparently its the fifth best city in the world...whether that's true or not I can confidently say that all of my and my clients RE has almost or has doubled in value recently.

    2Reply
  • Jeffrey Donis
    Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y

    As I am sure most have said- midwest + southeast markets

    0Reply
  • Paul MoorePro Member
    Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    @Alysha Johnson great post.  I recommend you follow some of the smartest and most experienced multifamily syndicators out there.  These would include Ken McElroy and @Brian Burke. They have both been in multi family over 20 years and they are both investing in Arizona.

    I’ve spoken to both of them recently and they said that the migration from California and all of the new jobs make quite a compelling case for Arizona. I think Utah and Colorado as well as other states are getting similar benefits. You should look for a very strong positive net population migration, pro landlord government, low unemployment, a diverse job base, and other factors like that.

    All of my comments here remind me that you may want to consider investing with a great multi family syndicator like the two I mentioned above, however there are many great ones. Investing with a team that has a great track record and gets a lot of off market deals is hard to beat. That’s how I (and my firm) invest.  

    Good luck!

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