Multi unit or single family strategy

[Ryan Green]

All,

I am new to Bigger Pockets and am really excited to become part of the community. I have  a question I would love advice on. Ill give you a high level overview of the situation and my goals.

My overall goal is to buy and hold rental properties and create 200k+ cash flow / year over the next 10 years. I am a licensed agent, have done a few flips and  I currently own 5 properties that net about 25k per year. I have a strong amount of cash available to buy a larger commercial multi unit. However, I haven't had much success finding a great deal in my current Chicago market. I have read and researched several different strategies and I am going back and forth on 3 strategies and I would feedback/advice. Below are the 3 strategies:

1. Be patient, keep saving money and keep focused on buying a larger multi unit when something comes up in my Chicago market. The larger multi unit will be in the 1-1.5 mill range. It may have a cap around 8% based off my market. I'm a licensed residential agent but don't have much experience in the commercial space. I am also willing to partner with a commercial agent to take over and help find me a deal. I've tried with no luck yet.

2. Buy 2-3 single family/condos at 80% to value in the 100k range, put some work into for instant equity and rent out at about 500 net profit a month. Refinance and repeat over the next 10+ years. I'm a licensed agent so this option is easier for me to find properties, less competitive (I'm not a full time investor), and I am personally more skilled at valuing these properties and acquiring them. However, this method will obviously take more time.

3. I've also even thought about purchasing a larger multi unit in another market (Currently in Chicago but I know areas in WI may be lower cost to get into and cash on cash returns are higher). There are drawbacks to this but also several pros. I would obviously need to really dive into and understand the market before jumping in.

I am extremely eager to keep growing my portfolio and would love to hear your thoughts! Thank you all in advance for the feedback!

Ryan

[Mike Dymski]

If you can purchase safe apartment complexes at a true 8 cap and $100k SFR/condos with $500 per month (fully loaded) profit, you should buy as many properties that you can put your hands on (and more) of either or both (and cut your timeline from 10 years to just a few.)

I'd be cautious of using a buyer's broker in the commercial space.  In many markets, that will put you at a disadvantage to other buyers who are working with the seller's broker.  Commercial is different than residential (in many markets).

[Deren Huang]

@Ryan Green

Just a heads up, you posted in the "success stories" forum.

But anywho, welcome to BP!

[Stephanie P.]

@Ryan Green

There are lots of threads and podcasts about multi units.  I'd jump on some of those if I were you.  They're a wealth of knowledge.

We are seeing success in smaller markets like Akron and Indianapolis where you can purchase a multi unit property and have serious cash flow right away.  Sounds like your WI scenario.

I'd say you're off to a great start.  

Well done

Stephanie

[Jay Dean]

@Mike Dymski has the right idea in my opinion.  You said yourself these are easier and you are more skilled in this area.

[Crystal Smith]

Originally posted by @Ryan Green:

 If I was you I'd position myself to pursue all three options.  

• Hire a commercial agent to start looking for the large mult-unit locally if you don't feel comfortable doing it yourself.
• Use your own expertise to find the single family/condos
• Plan a trip to Wisconsin (use it as a write off) and hire someone there to find your multi-unit

You'll probably end up w multiple opportunities to evaluate.