I have been in RE four years. I have done moderately well. I have been successful using only one type of RE investment strategy. I do residential and small commercial multi-family value add investments. My strategy is very simple. I try to purchase for $50 - $60 a square foot monthly, fix up the units, and then lease the units out for $1/SF monthly. If the big picture idea stays according to plan than the investment is always successful.
I am assuming that most experienced investors who run the numbers see how fantastic of a deal that is and how ridiculous of an expectation that is to have in today's market . And I realize that. The market has rebounded and that strategy has gone out the window. I can make my margins closer but I really have no desire to.
Which leads to my question. With this lack of inventory, specifically in the value-add multi-family space, is anyone looking outside of real estate into other business at the moment.? I will have a 1031x coming up soon (selling a 4 unit) and do not really want to reinvest back into MF (and more generally real estate at all). Responses much appreciated. Thanks!
You just described why those of us who buy for cash flow, and don't depend on potential future (kind of like synthetic plastic) equity build-ups as our reason for living, buy for cash flow. Rents don't go down when the market goes down...they go up. If I banked on an uncontrollable events, or series of events, that would give me a projected return somewhere in the distant (telescope distance) future...and while I'm waiting it out, I'm rationalizing how I'm going to hit it big when I'm too old to enjoy it....well I don't.
I buy for positive cash flow all day, every day. Oh, and I still have equity in all my deals since the lenders will only give me 75% of the ARV when I refi...that other 25% is what's called equity....I just don't buy because of it...I take it as a bonus.
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