Rental Property Investor · Cincinnati, OH · Member since 2019 · 21 posts · 12 votes
I’ve liquidated nearly 3/4 of my stock portfolio and recently acquired my first investment property - a duplex that is currently rented and doesn’t appear to require much work. I’ve found some other interesting small multifamily investment properties; would it be a poor choice to pursue these? I’m not over-leveraging my properties or depleting my overall liquidity, I just want to put my cash to work. I am also using PMs so I don’t find myself signing up for another job; want to keep this passive.
Congrats, If you ever have questions about small town investing, my entire portfolio is in small and tiny towns, I have 1 in a 50K town but thats the largest by far. I prefer SFR, but its all the same in my book, numbers work or thy dont. Glad to hear you are being careful with debt position, I personally think the GURUs are wrong, High Debt is a recipe for disaster down the road.
Congratulations! The hardest part is taking the first step, and you've done it.
Keep in mind, that even if you have a property manager you'll need to manage said property manager. They're not all created equal, some are good and some are...less good.
On your small multifamilies, right now deals are not easy to come by. So if these properties are publicly listed, just be careful. There's probably a reason they haven't been bought by someone else yet. It is certainly possible to find decent deals out in public, but it's going to be a needle in a haystack. Success in multifamily right now requires good off-market deal flow through broker relationships.
Are you getting over your skis? Maybe. But the only way you'll really know is in retrospect. You could always ask someone to look over the deals and give their opinion.
Thank you both for the advice! It was on the market for ~70 days and the tenants are month to month. Its a small town in Wisconsin I know decently well cause my parents live there; I live in Charlotte, NC. It’s a few blocks from Lake Michigan and has been updated recently. I think the thing that scares people away is that everything in the town was built in the late 1800s and one of the tenants has a ton of clothes thrown all over the place.
My realtor thinks it will appraise for a lot more than I paid for it given the area and direct comps within a block or so, making it a solid candidate for a cash-out refi.
@Taylor L. as for how passive I want it to be, I don’t want to be thinking about it every day but I am fine with being the Sherpa to navigate it through this process. I’m in investment banking and work a lot, so even if I invested local, I’d likely need a PM.
@Alyssa Dyer I’m open to investing anywhere that makes sense. To start, I’m just targeting markets that I’m familiar with based on having family or friends in the area. Luckily, I grew up in the Midwest, which is where my family and friends are so that’s where I’ve started. I’ve noticed CIN, MKE, KY and KC are the best candidates.
Sorry for the long winded answer. I’d love to hear what you two are currently working on!
Congrats, If you ever have questions about small town investing, my entire portfolio is in small and tiny towns, I have 1 in a 50K town but thats the largest by far. I prefer SFR, but its all the same in my book, numbers work or thy dont. Glad to hear you are being careful with debt position, I personally think the GURUs are wrong, High Debt is a recipe for disaster down the road.
Good to see your success in smaller towns. I like your concept of low debt levage. Personally seen 3 downturns in my life time and I it is sad to see how the highly leveraged investors go out of business.
It is not the quantity, but quality of investments with lower risk factor wins over long haul.
@Emmett Burton I love it! It sounds like you're on the right track with that one hopefully. Let us know how it plays out.
That's exactly where I was headed with the OOS comment. The midwest market is just so solid right now. I'm actually in OKC and off market I'm so consistently seeing 8% rates of return in decent neighborhoods. I've seen hundreds of out of state investors come here in just the past year. So it's not just my bias from living here!
I have found some wonderful deals right on MLS! Tenant occupied houses OFTEN go unsold for a while. Being a broker forever, I can say this: it is often the buyer's agent's fault; we just don't like having to make appointments with uncooperative tenants.
Here is the delta--the more uncooperative the tenant, the smellier the house, the dirtier -- all the BETTER for getting a below market deal.
My investing stratagy over the last 30+ houses has been buy cash, do the necessities, and pull out my cash through refi. An all-cash buyer has an advantage. It's now called BRRR. Also, I only took 65% LTV on the refi, all with a 15 yr amortization. What d'ya know? It worked!
Have an update! I had been looking at a townhouse community in a booming neighborhood of Charlotte for a long time, walking through many units. This past Friday night, the nicest looking one I’ve seen went on the market. I walked through yesterday, put in an offer right away after hearing it had been shown over 15 times already and had my offer accepted this morning! It’s a 3bd/2.5bath and will be my primary residence and I will Airbnb the open rooms.
Although I was open to finding another out of state investment, I saw this as a great opportunity to 1) house hack and live for free; and 2) learn the Airbnb game so I can add another set of skills to my tool belt.
Closings are set for 6/28 and 7/14. It’s going to be a crazy summer and I can’t wait!