When starting in MF what is one thing you wish you had known?

Multi-Family and Apartment Investing
4yFollow

When starting in MF what is one thing you wish you had known?

Hayden Wright
Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes

As an investor looking for my first multifamily property, I’m curious to hear what knowledge or advice would you have liked to know when you were starting out?

0Reply
91 views

Most Popular Reply

Chris Levarek
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
4y

@Hayden Wright What size? Technically a duplex is multifamily. In most cases, here are some universal tips :

  • buy for cashflow
  • buy value-add as it helps insulate risk as a newbie
  • build a team in areas you are weak in or do not want to do
  • cheap multifamily will typically rent to low income tenants
  • cheap multifamily will have bigger renovation budgets
  • cheaper price fees and large unit count portfolio's do not equal a good property manager
  • never assume anything
  • partner up
  • and if raising capital, raise early as @Taylor L. so equivocally mentioned.
5Reply
See this reply in the discussion

23 Replies

Jump to latestLatest
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    4y

    Find the money first

    3Reply
  • Chris Levarek
    Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
    4y

    @Hayden Wright What size? Technically a duplex is multifamily. In most cases, here are some universal tips :

    • buy for cashflow
    • buy value-add as it helps insulate risk as a newbie
    • build a team in areas you are weak in or do not want to do
    • cheap multifamily will typically rent to low income tenants
    • cheap multifamily will have bigger renovation budgets
    • cheaper price fees and large unit count portfolio's do not equal a good property manager
    • never assume anything
    • partner up
    • and if raising capital, raise early as @Taylor L. so equivocally mentioned.
    5Reply
  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    4y
    Originally posted by @Chris Levarek:

    @Hayden Wright What size? Technically a duplex is multifamily. In most cases, here are some universal tips :

    • buy for cashflow
    • buy value-add as it helps insulate risk as a newbie
    • build a team in areas you are weak in or do not want to do
    • cheap multifamily will typically rent to low income tenants
    • cheap multifamily will have bigger renovation budgets
    • cheaper price fees and large unit count portfolio's do not equal a good property manager
    • never assume anything
    • partner up
    • and if raising capital, raise early as @Taylor L. so equivocally mentioned.

     Let the record show that I kept mine to one per the topic ;)

    2Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Taylor L. Thanks for the advice Taylor!

    0Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    4y

    @Hayden Wright I look at the cost of taxes because they fluctuate wildly in my area potentially by as much as $5,000 on two otherwise equally valued $200,000 properties which can eat up your cash flow immediately.

    I also look at the cost of utilities that I have to pay. In my area it is typical for the owner to pay heat, hot water, water, and sewer. Once again, heating oil can vary wildly depending on how well a property is insulated. This can create a $3000 or more difference in costs. Often I go in and spray foam insulate as soon as possible which may cost me $7-10,000 but will not only save me oil money but will keep the units more comfortable year round and cooler during the summer keeping tenants electricity costs down for their A/C.

    I got lucky on these two things with my first building but when I started doing my SFH I quickly realized I was going to have to upgrade systems and the heating bill was killing me and the more buildings I looked at the more I started noticing the discrepancies between the taxes and utilities between properties in the same town and in different towns.

    1Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    4y

    @Hayden Wright HOUSE HACK! I would have bought a multi family first lol

    3Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    4y

    Fire Sprinkler systems. Ours was mandated 2 years AFTER we closed after an apartment bldg fire in the town had the bldg insp enforce all the IROC2018 fire protection codes, no exceptions. I was permitted to design & install it all myself so that saved us $$$$thousands. Now its 24/7 1st responder monitoring $100/month & the tenants appreciate it.

    Had to learn the idiosyncrasies of a hydronic heat boiler system. Then learn how to swap out a $162 boiler blower motor after being quoted $975 by HVAC guys. Then learn how to replace $118 Honeywell solenoids on the fly onto an octopus of very hot piping, HVAC quote $425. Had to retrofit (love Pex) new hydronic baseboards as old one were very large, leaking & disgusting. Picked up a lot of new ones for 1/10 of retail price at an auction. 

    Good luck it's a blast

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    4y

    learn how commercial properties are underwritten this way you understand the numbers from the correct vantage point. 

    2Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    4y

    Add more money into your reserve account than you think you will need.  Something you weren't accounting for will end up happening. 

    1Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Hayden Wright know how to value asset condition. Your two most variable cost are CapEx and maintenance, not knowing how to accurately project these can make make a bad investment look good.

    Irish Jones Realty4.948 Reviews
    View Page
    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    4y

    @Hayden Wright higher cap rate is not always better, capture initial equity through value-add, reserves should be substantial and you will likely use them, if you buy off of a long-time owner be sure to budget for insurance and property taxes to be a lot more than they’ve been paying, buy in an area where rents and property values are going up (good market fundamentals like lots of jobs in diverse fields, affordability (wages can pay the rent), population growth, good schools, low crime etc.).

    0Reply
  • Account Closed
    Investor · Fort Worth, TX · Member since 2019 · 120 posts · 147 votes
    4y

    @Hayden Wright Start big - 100+ units. We started with 6 units and thought we had to work our way up to the big leagues - you don't. If you have the right coach and partners, you can build a big portfolio.  We went from 6 units to 173 units... and the 6 units wasted time and money. Best of luck!

    4Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Alecia Loveless thats great advice and something I definitely wouldn’t have thought of. Thanks!

    0Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Pat L. Great advice. Thanks for the response, Pat!

    0Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Mary M. Thank you, Mary!

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    4y

    Ask specific questions that need to be aswered in your for rent advertising.  

    I wasted so much time interacting with the non-qualified early on.   One house or whatever didn't matter so much, but multi unit magnification sure did.  

    0Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Matthew Irish-Jones thanks for the response, Matthew! I’ve read a couple books that discuss the importance of this, is there any other way you’d recommend to learn how to properly assess and value properties?

    0Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Hayden Wright get a bunch of market prices for replumbing a house, rewiring, new furnaces, new roof, new vinyl window cost, price per sq on flooring, price per sq for painting, etc...

    Irish Jones Realty4.948 Reviews
    View Page
    0Reply
  • Adam Lacey
    Investor · Castle Rock, CO · Member since 2018 · 297 posts · 159 votes
    4y

    1. Start building your investor database now 2. Focus on one market

    It's going to take time to get a lot of investors comfortable with real estate syndications in general, let alone ready to wire funds.

    I was also spreading myself too thin by looking at multiple markets. I cranked up my deal flow to a point where I couldn't keep up with the analyses and probably missed some strong deals in the process.

    1Reply
  • Chris C.
    Raleigh, NC · Member since 2017 · 347 posts · 94 votes
    4y

    @Pat L.

    You have a PE in fire Protection? I'm impressed

    0Reply
  • Hayden Wright
    OP
    Rental Property Investor · Houston, TX · Member since 2019 · 87 posts · 69 votes
    4y

    @Steve Vaughan thank you, Steve!

    0Reply
  • Account Closed
    Property Manager · Boston, MA · Member since 2014 · 194 posts · 73 votes
    4y

    @Hayden Wright

    1: Invest with someone that’s already doing it.

    2: go to open houses.

    3: ask questions to builders, real estate agents, property management teams.

    Most valuable question that I never asked and that a builder accidentally said out loud it made the difference. Was these are good because you would pay $40k a door. This was in the past obviously. Happy thanksgiving Hope that helps

    0Reply
  • Doug H.
    Rental Property Investor · San Diego, CA · Member since 2015 · 96 posts · 59 votes
    4y

    @Hayden Wright

    For me, managing a 30 unit “C” property is at least 10 times the work as managing a 30 unit “B” property.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free