Saint Charles, MO · Member since 2013 · 11 posts · 2 votes
Hello! I'm new to BP and looking to connect with some folks in St. Louis and St. Charles. Almost by accident I've got a few properties that I'm renting out, and I find that I'm enjoying it. I'm considering investing in an apartment building, but I know that's biting off a lot.
Hello Michael. I live in St. Charles and invest in South City. Mainly buy and hold but I've done a handful of rehabs too. I've looked into a couple of apartment buildings but end up going back to the familiarity of SFR and two-families. Bigger Pockets is definitely the place to get a great education if you are looking into something new.
If there's anything I can help you with, let me know.
Hello Michael! Welcome to Bigger Pockets. You will find virtually everything you are looking for regarding your real estate investing education. Just look for articles and podcasts about "apartments" to find more info. Again welcome!
Hello Michael. I live in St. Charles and invest in South City. Mainly buy and hold but I've done a handful of rehabs too. I've looked into a couple of apartment buildings but end up going back to the familiarity of SFR and two-families. Bigger Pockets is definitely the place to get a great education if you are looking into something new.
If there's anything I can help you with, let me know.
@Bob Hines , can you tell me more about why you've avoided apartment buildings? In my (naive?) view, it seems like they'd be superior to SFR in almost every way. (Except more expensive and complex to acquire, I imagine.)
I've only looked at a handful of apartments over 5-6 years. From what I remember, one had pipes and vents missing in the basement and there was one big water heater so they (12 units) must have been set up to be on one water heater and unsure about heat. That is a situation that I was/am unprepared to sort out. Another (6 unit plus huge rentable 2 story garage) was listed as 2 bedrooms units and I was super hyped about it for the price and the location as it's in an area that is really coming back. Went and looked at it and all of the units are "2 bed", shotgun style apartments. It would be a great prospect to gut and turn into 3 upscale condos in 10-15 years, but not good enough to have to gut right now to get a good layout to rent to most tenants.
I personally prefer to rent one house for $800 to people that can pay $800 instead of two apartments for $400 to people that pay can $400. So that has affected my willingness to move past two families into larger properties. I hear apartments can be good, and maybe someday I will get there, but I haven't gotten there yet.
So it was mostly an issue finding the right property?
I have various friends that own one or more SFR and rent them out (which is what I do), but I don't know anyone who owns a small apartment building. Everything I've read says that apartments are more profitable than SFR. I'm trying to figure out how to get a feel for that in the St. Louis area.
Hey @Michael Williams Thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts" to get into conversation in your target area.
Welcome to the site, @Michael Williams ! We're here to help, network & to do business. Thanks for jumping in. Here's a great post about starting out with a small apartment building that may be helpful . . .
Michael Williams right with you on the multi family angle. St Louis is a ridiculously good city for multi family investing. There are tons good properties.
Welcome!
Where are you looking to invest and how many units?
@Account Closed Why is STL a great place for multifamily investing? Please enlighten me!
I live in St. Charles so it would be nice to buy something nearby, especially for my first MF. I think I'd like to start with 4 units to really learn the ropes, and maybe something bigger after that.
Are you in St. Louis? Or familiar with the area?
[Edit]
D'oh, I can see in your profile that you're here in St. Louis.
So it was mostly an issue finding the right property?
You definitely have to know what to look for! I didn't really have any idea when I bought my first MF, but after living in it and doing work on it I knew what I wanted for the next one. Here are some things I always want:
-Separate meters...why consider single meters unless you can get significantly better deal and meter out yourself?
-Central HVAC...window units are ugly and always have issues with condensation rotting out wood, siding or brick. Tenants like central heat, so why bother with a building that doesn't have it?
-Separated plumbing and water heaters, preferably with individual shutoffs for each unit (rarely see separate metering in my area)
-Functional rooms...you don't want a "2 bedroom" where one of the rooms is 80 square feet without a closet. You might as well consider it a 1br with an office even if the seller tells you its 2.
I love multifamily and would argue that one 4-plex is much easier to manage, finance and maintain than 4 SFRs.
As a side note, I'm originally from StL (will actually be back for Mardi Gras this weekend) and will likely buy MF properties there in the future. At a quick glance, the numbers look better than Louisville, and I've had great experience investing in Louisville thus far!
Welcome Michael. There are a lot of super helpful people and great advice on this site! I’m a ‘fix and hold’ investor from the Bay Area in CA, and loving it! A lot of others doing flips, wholesaling, notes, everything.. A few tips..
You can tag people by typing @ before you type their name, then clicking their name when it pops up at the bottom of the message box. You can click on the ‘vote’ button if you like someone's post or is helpful, and there are ‘awards’ to earn on your profile. The "Learn" link across the top navigation bar has lots of great info, and most importantly, the BP members! Welcome to BP, and good luck on your investments!
@Michael Williams - welcome to BP and keep stretching yourself to do things you find uncomfortable like getting into apts if that's where your interests lead you.
If I find a property listing I am interested in, could I share it on the forums and get feedback? Or is someone likely to jump in and buy it out from under me? :)
Michael Williams I think St Louis is unique because of its multi-family housing stock. In the city it seems like a majority if the buildings are 2-4 units. So, plenty of selection to chose from and famous Midwest housing prices (which results in pretty good cash flow). And there is strong rental demand, especially in the central corridor. Lots of college students and young professionals.
I started investing when I lived near the Botanical Gardens and knew South City pretty well. I then moved to St. Charles and started looking to invest closer to home to save the drive. 4 years later and I'm still buying and driving in to South City. The biggest reason is the taxes. In the city, I average 1 month rent (or lower after the last reevaluation) vs 2-2.5 months rent in St. Charles and 1.5 months rent from what I was looking at in The County. That's a big profitability difference to me so I make the drive still. I live near New Town and I can get down to Carondelet Park in 40 minutes from my house and I work in Clayton anyway so it's not bad. Just wanted to put that out there for you to think about.
Depending on where you live, North County isn't that far and might offer more opportunities than St. Charles.
I'm in Stable Ridge, across Boschertown from New Town. Maybe we can meet up for a beer and REI discussion at Padavan's or The Tap when it opens up.
Taking 370 to 270 to 170 to 70 around downtown to 44W or 55S, only takes about 30-40 minutes or less to get to a lot of places. Factor in taking 270 to South County/Jefferson County, proximity to North and West County and living in St. Charles, we have nearly the entire metro area as a possibility to invest in without too bad of a drive. Whatever area you choose, make sure you learn it and focus on it. I stick to South City as that is the area I know well and I have my handymen, electrician and plumber there and they don't like to travel too far, even for work.
Actual City taxes for my 5 rental houses for 2013 are as follows:
Rent 595, tax 450
Rent 550, tax 460
Rent 800, tax 660
Rent 750, tax 640
Rent 725, tax 760 (purchased Oct 2013 so hasn't been reevaluated on new sales price yet.)
My 2 families with the total rent stated:
Rent 1200, tax 1000
Rent 1000, tax 545
I looked in Maplewood & U City and thought the taxes were about 1.5x-2x rent. St. Charles seemed to be about 2x or more monthly rent from the places I have looked at. Taxes on my own house are $3300 and I don't see anybody paying anything close to that in rent.
@Bob Hines Yeah, it'd be fun to get together. What about Mattingly's? I've never been there, but been meaning to try it.
Are taxes higher in STC because property values are higher, or because rates are higher?
Also, do you work full time? I've got two rentals (SFH) now and there's very little work involved so far. Not sure how that scales with multifamily properties.
@Michael Williams I've driven by Mattingly's many times but never stopped so I would be in.
Yes I work full time. Three kids with activities too. Two families are the biggest I have but with 9 tenants-5 houses and 2 two families; I have not had much work involved with the actual management of the properties. I firmly believe that in Real Estate you make all of your money at the beginning-on your initial buy and who you let into your property. This translates into work also. I do some work on the properties myself, but even if I didn't, there is a lot of work at the beginning getting them ready to rent, showings, screenings etc. But then it's pretty easy after that. Most of my properties were foreclosures so sometimes a surprise overlooked repair comes up once somebody starts living there but once it's fixed, it's fixed.
A concern I would have with the jump to larger units is the possibility of yearly turnover, especially if it is 1 bedroom units as that tends to be temporary housing. Houses tend to attract people who are looking to stay for awhile. I do see the economies of scale of 2 units with 1 roof and 1 insurance policy on a 2 family is cheaper than 2 on 2 separate houses. But I get most of my complaints from the 2 families too-noise, parking, kids did this, basement storage etc.
I'm not sure about the tax rates. I might be way off on my rental rates in the calculation too. But I know in the city I can count on about 1 month rent for taxes so I stay with what I know and what is profitable.
One in Los Angeles,, one in Cottleville (St. Charles county), and one in 63301. So I guess that's three properties, not two :)
I definitely agree about the work being front-loaded, that's what I've seen also.
This week is pretty crazy, but it would be cool to meet up after work some time next week. Could be an open invitation to anyone from the board who is in the area. Tuesday evenings work pretty well for me.