Utah multi-family strategy. Plz Help

4 Replies

Hey all! Newby here looking for some direction.  I have a couple duplexes in Utah County (Provo) and I think I’m ready to expand my portfolio. After listening to bigger pockets and other podcasts I’ve realized there’s a lot of different strategies out there, possibly, with better returns. 

With this post I just want to lay out the details of my current position then get insight/suggestions from the pros to help determine my next move. 

Duplex 1 

    • •Approximate Value: $390,000
    • •30yr conv balance: $212,000
    • •Monthly mortgage: $1,150 (recently refinanced)
    • •Monthly rental income: $2,200
    • •Property has been very low maintenance, zero vacancies, new roof needed in next few years.
      •Both units updated. 


Duplex 2 

    • •Approximate Value: $415,000
    • •30yr conv balance: $278,000
    • •Monthly mortgage: $1,850 (was planning to refinance in Dec)
    • •Monthly rental income: $2,200
    • •Recently dumped $20k into this property for new plumbing, ac unit, and furnace.
      •zero vacancies, new roof needed in next couple years.
      •Both units updated.   

My wife currently manages the properties and uses Cozy for listings, rent collection, applications, screening, etc.

We currently have $120k cash set aside to invest in real estate but we have no idea what to do next. Our only requirement is that our next property be in the same general area so we can continue to manage all the properties ourselves.
Maybe we can get a better return on single family rentals? Via Airbnb? Maybe we should sell both and take our current cash on hand + cash from sales (around $400k total) and use it as a down payment to get something with more units and maybe a better cap rate. I'm open to any and all insights and suggestions.

Thanks in advance!

Hey @Eric Moreno , that's the golden question, right? I have two duplexes in Provo and two new condos in Vineyard and there are definitely pros and cons to each. It also depends a bit on if you're more interested in pure cash flow or if you want to make an appreciation play. I have helped a lot of people with this same decision and I'd be happy to chat with you about it and give you my two cents. Feel free to shoot me a message!

@Eric Moreno welcome to the forums! This might not be the answer you are looking for, but it really depends on what your goals are and what is most important to you. If cash flow is most important, then you could refinance your other duplex and improve that cash flow. Your return on equity on that second duplex could be a little higher. If your overall net worth in the future is the most important, you could exchange both properties and trade up into bigger properties. Personally, I have been switching out some of my older properties with the 1031 exchange for newer ones that give me a little better return on equity and are properties that won't need a lot of capital improvements in the near future. Overall, congratulations on building a good portfolio and setting yourself up well for the future!

@Eric Moreno ,

I own 2 fourplexes and a dupex in the area.  Here are a few options:

1, Your best return would be getting a nice house and using it as a vacation rental. I don't do this because I couldn't handle getting new renters every week. I have a friend that does very well at this in the area.

2, Upgrade to fourplexes. This would be the traditional more conservative route to go.

3, With that much equity and cash on hand you could to get a 1.5 - 2 million commercial multi-family property. A good option would be to get a bridge loan on the property for 1 year to finance fixing the units up and raising rents. A property manager could handle the upgrades for you which I have found to be very nice. After the 1 year period you could get traditional financing on the property and pull your down payment out to repeat the process.

I'm looking to do the 3rd option now on one of my properties.

-Ray

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