Considering a Multi-Family Investment

[Chris Noles]

Hi!

I made my first investment in a vacation rental in Myrtle Beach last year.  I am wanting to acquire another property, but before I decide to pursue another vacation rental, I want to see what opportunities are out there with cashflowing multifamily homes.  

My budget is for a turnkey multifamily for $120K or less which will cashflow well. Tenants could be in place but not a requirement. I would love to do a BRRR or FLIP, but my wife and I are new parents and that would be too time-consuming. Cashflow is our main focus, so the property does not have to be in an area that appreciates all that much. We live in NorthWest Georgia, and our target area would be a good market that is within 7 hours driving distance since we plan to self manage. I have been reading many posts about the midwest market being best for low cost of entry. Places like Ohio, Indiana and Wisconsin, but in those areas only Cincinnati seems within a reasonable driving distance.

For the SouthEast, I am hearing that Macon, GA and Gastonia, NC might be good markets, but I haven't seen anything much on the market compared to what I am seeing in the Midwest.

I am open to feedback, and I am open to agent referrals who might be able to help me understand any of these markets.

Thanks!

 

[Adrienne Green]

@Chris Noles congrats on your first investment!  I also own vacation rentals in Myrtle Beach, and I've been very happy with that market.  Eventually you could look at cashflowing MF longterm rentals in that market, I don't think your current budget would go far there right now.

I'm just up the road from you in Chattanooga!  In this market we sometimes can find a C class turnkey single family for $120k or less, MF wouldn't happen at that price point.  Have you looked around Dalton or other areas close to home?  There might be some options there.

In most markets, if not all, at that price point you're going to be looking at a C or D class property.  That can be a handful for self management due to greater risk of tenant non-payment and eviction, not to mention that the property will likely have deferred maintenance to start off with, and incur more wear and tear.  I wouldn't recommend self managing at that price point, and doing it when you're not local is an even bigger ask.

I'm assuming budget is the limiting issue here.  In that situation, some options are (1) wait and save until you can buy something that's a better fit for you; (2) flip to build equity; (3) find other loan options or partners that stretch your funds into a higher price point.  You're focusing on your cashflow goal- consider building equity so you have more funds to invest for that cashflow.

In NW GA you are right in the path development as Atlanta and Chattanooga expand along 75.  That corridor is projected to have explosive growth over the next decade.