I am new to BP and this is my first post. Just purchased my first property that is a 6 unit in NW Indiana. Any advice you have for a newbie?
@William Hart glad to be the first responder to your first BP post. Congrats on joining BP and starting down your very own REI path. Congrats also on jumping right in with a 6-unit! Commercial multi-family is right where I'm headed as well. Here are a couple thoughts for you.
Management. Not sure if you're self-managing, but I'd highly recommend it. Partly because of the cost savings, but partly because of the knowledge you'll gain that will be important as you grow your portfolio. As you add more and bigger properties, you'll at some point likely transition to professional management, which will add more risk. For example, they'll never care as much about your property as you do. And you won't be able to control everything they do. But as you cut your teeth on your first smaller properties, you'll be much more able to manage and mitigate the risk of using professional management.
Adding value. As you take over that 6-unit, and frankly with any property you acquire, always be looking at how you can improve the value of the business. 2 main ways to add value. First is via the BRRRR approach (many forums, podcasts and blogs on that topic). Second by improving operations. As you probably know, 5 doors and up is considered commercial, and commercial properties are valued based on their operations not based on comparables like 1-4 door residential properties. So any way you can improve operations (raising rents, reducing vacancies and expenses) will have a compounding effect on how your business is valued (code for forcing equity), allowing you to potentially refinance and get cash out of the property to use toward future acquisitions.
Tenant experience. Work hard to fill your property with your ideal tenants (lot goes into that, I know) , and then keep them happy. Give them a great tenant experience, and they are most likely to give you a great REI experience. We use that approach in our SFR properties.
So much more that could be said, but hopefully there are a few helpful nuggets in there. Best of luck to you!
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