Investor · Atlanta, GA · Member since 2014 · 40 posts · 18 votes
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.
Kansas City MO · Member since 2014 · 357 posts · 349 votes
11y
@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.
Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
11y
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.
Real Estate Broker & Investor · Indianapolis, IN · Member since 2012 · 218 posts · 83 votes
11y
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.
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.
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.