Purchased My First True Investment Property (Multifamily)

10 Replies

I just closed on my first true investment property here in St Louis, MO. This will be my 4th property, but the first that I will not actually occupy for the first couple of years (active military). I hope to acquire at least one MFR/Year going forward. Here are the particulars:

Purchase Price: $62,000

Gross Monthly Rent: $1640

Monthly PITI (25% down at 4.89% on a 30 yr fixed): $480

Monthly Expenses: $853

Estimated COC: 16%

Estimated Cash Flow Per Door: $135

This is a C property in a C neighborhood.  Hence, the returns might not actually be worth the future headache (vacancies, maintenance, etc.).  Although, I have an amazing, albeit expensive, property management team and a have accounted for the higher expenses in my due diligence so hopefully that will reduce some of the strain.  I'm still excited about the deal, but I'm realizing that I have to do better!  The weekly podcasts are amazing, but every single time I listen to one, I learn about another mistake that I've made... 

@Frankie Woods I just read you post and I'm trying to start to do the same thing you seem to be doing are there any tips you would have me on taking the steps. Maybe any mistakes not to do.

@Antonio Tyler  

Thanks for taking the time to read my post. My initial thought process was simply to purchase a nice home at market value whenever I moved while taking advantage of the VA loan. I discovered that you can actually have multiple VAs (as long as the property is your primary residence for at least one year) up to a certain threshold (~400k). That, in and of itself, is a huge help to people in the military. It essentially makes your return (if it's positive) infinite because you do not have to bring any money to the table).

I think my biggest mistakes were that I 1) purchased a condo, and the condo/association fees really kill the deal and 2) purchased my previous properties at market value.  At the end of the day, I still enjoyed living the properties, but I could have increased my return substantially.

If I were to do it all over again, I would use the VA to purchase a multi-family, live in one unit and rent out the others. Also, I would find distressed properties that are well below market value (i.e., using the 70%, 50%, and 2% rules). I'd also start marketing to absentee owners as soon as I found out that I am PCSing. That would give you at least six months to find a property.

Other than that, I would say just make a move and continue to learn.  Concentrate on learning your market in order to understand where/what a deal looks like.  Finally, because we move, you need to find a trustworthy property management company. 

This is a great community and there is a wealth of information!  I wish you luck and don't hesitate to hit me up in the future!

@Frankie Woods thank you for the response. I plan on doing the living in one half and renting the other half.

Congratulations!!!

My husband is also active duty. That's awesome about your 4-plex. We are buy and hold single family as I have not found anything else that works for us. It's a great feeling when you buy your first rental! Good luck! Feel free to hit me up if you every want to compare notes!

that is great. now add more money to the principal every month and get the property paid off early.

Hi Frankie, I also live in St. Louis. Where is your property located? How did you find the deal? Who's your property manager and how did you find them? I will be looking at a first investment next year so just curious what other investors are up to in my area. You can send me a Message if you'd rather not post all the details on the forum. Thanks!

Elizabeth Colegrove I was struggling with what to do with the cash flow (i.e., paying off the mortgage early or investing in more properties).  I'm not quite sure yet, but I like the idea of being free and clear!

@Max Householder I am loving this market. There are so many potential deals. My property is located on Louisiana Ave, across from Gravois Park. I worked with a realtor from OWNSTL and found the deal on the MLS. I'm using Frontier Property Management, who was recommended to me by another BP member (Gunnar Teltow). I just started using them, but so far it's been great. They are a little expensive as they charge 10% plus the first month's rent, but for a C property in a C neighborhood, I think it will be worth it.

We personallly are reinvesting the cash flow into buying more houses. When the next bble starts to approach we plan on paying everything down. Right now we are still finding deals and money can be borrowed cheaply.

Cool, cool. I will check out OWNSTL. I had never heard of them. Near Gravois Park right there is a decent little pocket of south city. It's very block-to-block in that part of the city, but looks like you found a good property! Congrats

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