MFs in the Midwest (Kansas City, Indy)

9 Replies

The Midwest is great market for SFH rentals. However, my preference is for small, commercial MF for several reasons, but particularly for the commercial financing (pricier, but don't have to deal with DTIs and property # limits). (I wouldn't mind acquiring SFHs, but conventional financing is as pleasant as skewer to the eye & makes quantum mechanics look easy. Especially when trying to refi out of a rehab loan.)

So, I'm wondering if the Midwest is also a good market for these small properties (5-6 units)? Or do I need to stick to the East Coast? I have some assets, but want to stretch them as much as possible in more affordable markets. 

Thoughts?

@KJ D'Costa  if you ever have interest in the Ft Wayne market let me know I would be happy to talk to you and help in anyway possible.

@KJ D'Costa  I've looked around at both markets you mentioned  (Indy & KC)and also have friends who invest in both. From what I've seen & heard you need to be careful to buy multi families in good areas in both these cities. There tends to be lower quality tenants that rent multi-family compared to SFHs in the Midwest and a lot of out of town investors get themselves into big trouble chasing the high yields in bad areas. But that being said I have a couple friends who own 5-6 unit places that seem to do well & get high yields in both Indy & KC. You just need to have a really good property manager and work with good people. I've noticed that multi families in really good school districts seem to work well there for investors. 

Why do you want smaller properties?     MF is all about efficiencies of scale, which is esp. important if you're an out of state investor needing to hire prop mgmt.    If your budget precludes bigger properties, think about raising funds w/ other investors.

There is no reason you can't get commercial financing on a SFH....I have it on two currently, mainly because my cost to obtain was much lower and much easier.

@Jeremy Tillotson 

I'll take you up on your offer. Very much appreciated. You'll hear from me before the weekend.

@Laura Williams 

Thanks, Laura. You've confirmed my suspicion that my target Midwest cities aren't strong multi-family contenders. Back to the coast (East that is). 

@Chris S. 

Hi Chris, to answer your question my acquisition strategy is to rehab and rent, which is dictating my initial moves. I want to cut my teeth on SFH rehabs, before I tackle 2-4 units, then onto commercial properties. I'm completely with you in multifamilies, and that's the long term plan.

@Rusty Scott 

Can you clarify what you mean about your cost to obtain being lower and easier? Thanks.

Seems you can't tag more than one person at a time, so sorry for the barge of posts. 

@Laura Williams  

@Chris S. 

Hi Chris, to answer your question my acquisition strategy is to rehab and rent, which is dictating my initial moves. I want to cut my teeth on SFH rehabs, before I tackle 2-4 units, then onto commercial properties. I'm completely with you in multifamilies, and that's the long term plan.

@Rusty Scott  

Can you clarify what you mean about your cost to obtain being lower and easier? Thanks.

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