Real Estate Investor · StL, MO · Member since 2008 · 294 posts · 152 votes
9y
There is some mixed advice in this post. Some good, some ok and some bad.
The first thing to know about St. Louis is that there are actually two St. Louis'-St. Louis City and St. Louis County. Because of laws from a century ago, they are separate. There are actually 90+ different municipalities within those two as well. There is a North City and a South City. There is also a North County, South County and a West County. Each is very different from the others. Municipalities within those areas can be very different from others as well. Even neighboring ones. That contributes to the block by block nature of the region. It looks like there was some confusion about this above.
If I were to boil everything down to just one piece of advice for investing in St. Louis for those not living in the area, it would be this:
Investor · San Diego, CA · Member since 2016 · 37 posts · 13 votes
9y
I invested in two SFHs in zip 63134 (North STL) this June, so it's a little early to tell. I bought them below market value from a wholesaler (although it's a little tricky to tell with comps, as MO is a non-disclosure state). I don't expect anymore appreciation, but they are cash flowing ~14% ROI, could do better if they were financed. I bought them cash. STLHA has good section 8 payments.
If you have a zip code you are considering I can give you honest feedback as to the neighborhood and it's direction, the numbers you would have to consider separately.
The issue with STL is that you can have a very nice neighborhood with great properties on one block, drive a few blocks and you are in a rough spot.
Outside of 270 to the west this typically is not an issue. Again your numbers have to make sense for you.
Rental Property Investor · Saint Louis, MO · Member since 2016 · 123 posts · 84 votes
9y
I invest in the 63114 and 63116 zip codes. You can make good cash flow in most lower price range areas . It is just that some neighborhoods are better than others. Do you mind managing in lower graded areas? I do think 2-4 plexes at first cash flow better and mitigate risk. I prefer not to invest in North City as I believe it to be the worst area in St Louis. But I do know people who do really good in that area. If you have any specific questions, feel free to hit me up.
I have a 4plex (1/1s) in South City (63116). I bought it earlier this year and things are going ok. I'm in the process of evicting a tenant who was inherited from the previous owner. The eviction process was easy, and I'm hoping she doesn't leave the place trashed.
@Ben Dao hit the nail on the head. If you want cashflow you need to look in some of the lower graded areas, but be careful. St. Louis can go downhill quickly in just a couple of blocks.
I watch 63118 but haven't found any properties there I really like so far. I'm also actively looking in 63116 and 63109. Personally I like the 4plexes, and stay away from the duplexes & SFRs.
I had a 4 unit with roughly 2400 a month in rental income under contract for $120k in 63118. When I went out to see the property I backed out because of the area, quality of the tenant and it required too much capex. In the bad areas the numbers can look great but the tenants and repairs can make it a bad investment. $8k for new sewer laterals, $10k for a roof and that can be your profits for a couple years. Low rents and old properties means doing your due diligence is critical.
I don't like the recent rise in prices in St. Louis. Things have been getting hot and properties are going for price points I don't like. I would reach out to @Peter MacKercher and get his advice. He an active investor in South City and helped me find the property I bought.
Newport Beach, CA · Member since 2016 · 26 posts · 20 votes
9y
Just wondering....please let me know if you see value in this: As an investor, if you could click on an app and find out who lives in an area, their ages, when they purchased property, loan to value, home value, and the buyer habits/motives, whether they have children approaching school age or age of leaving the home, etc.. Would this help in deciding how or whether to approach?
So do you advice 4plex and triplex against SFR?. Aside risk diversification, is there any special reason for this? Typically, 4plexes are not usually in the A & B+ neighborhoods?
I'm open to most properties if they make sense. I've seriously considered a triplex and would purchase a duplex if the right deal came along.
I see myself as having 3 primary constraints I weigh for the number of traditional residential deals I can do: amount of cash invested, amount of time invested and the fact you can only get 10 Fannie loans with cheap financing. My goal is to maximize the amount of cashflow within these 3 criteria. After the 10 Fannie loans you'll either need to use cash, portfolio, commercial lending, etc.
As a result I don't want to buy a SFR or Duplex for $60k where I only net 200 a month and spent a lot of time purchasing the house. I would rather buy a 4plex at $120k and net 400 with the same time invested. Would you rather have 10 SFRs or 10 4plexes?
I really enjoyed BP Podcast 52 with Ken McElroy. He said doing diligence on a 50 unit is roughly the same as a 200+ units. If you are putting in a similar amount of effort, wouldn't you rather have more cashflow? During the next cycle I'll be focusing on purchasing ]apartment complexes. Would you rather manage 1 100 unit building or 100 SFRs? Not 100% equivalent, but hopefully you understand my point.
All of this is based on how I can reach my goals. Everyone has different goals, so they can have completely different investing strategies and still reach their goals. Identify your goals and figure out what works for you!
Investor · San Diego, CA · Member since 2016 · 37 posts · 13 votes
9y
On 63031 (Florissant), my properties are just slightly South of Florissant in Berkeley. My property manager suggested I buy my next properties in Florissant. I agree with the opinions that you (or your trusted advisor) need to do due diligence on the property and surroundings. But I disagree with avoiding North STL. If your on a limited budget like I am, you can squeeze more ROI out of lower priced areas. As an out of area investor, we need professional property management anyway. They screen and deal with difficult tenants, maintenance, etc. which is well worth 10% of rents, and offset by higher ROI. If you are going to try to manage the properties yourself, or have more money, or find a slam' hot deal, then yes, go for a higher class areas with lower returns but fewer headaches.
As for SFHs vs. MF, I own a Triplex in San Diego where land is expensive and deals are very competitive. In STL I'm buying SFHs wholesale at deep discounts with value add in repairs. I think deep discounts on plexes are much harder to find. My two SFHs cost $60k total, gross $1,300 rent per month and net ~$700. ARV is about $100k if I choose to cash out refi.
Residential Real Estate Broker · Saint Louis, MO · Member since 2014 · 1k+ posts · 567 votes
9y
@Ndy Onyido Hey, saw I was mentioned and thought I'd offer a chat if you're looking for more information. Feel free to send me a message if you'd like to talk.
Real Estate Investor · StL, MO · Member since 2008 · 294 posts · 152 votes
9y
There is some mixed advice in this post. Some good, some ok and some bad.
The first thing to know about St. Louis is that there are actually two St. Louis'-St. Louis City and St. Louis County. Because of laws from a century ago, they are separate. There are actually 90+ different municipalities within those two as well. There is a North City and a South City. There is also a North County, South County and a West County. Each is very different from the others. Municipalities within those areas can be very different from others as well. Even neighboring ones. That contributes to the block by block nature of the region. It looks like there was some confusion about this above.
If I were to boil everything down to just one piece of advice for investing in St. Louis for those not living in the area, it would be this:
Rental Property Investor · Saint Louis, MO · Member since 2014 · 313 posts · 326 votes
9y
@Ndy Onyido 63031 is in St. Louis County, outside of St. Louis City proper. A lot of people do well renting SFR in this area from what I've read, but the small MFR (2-4 unit) market in the county is pretty non-existent.
Small multis in STL are pretty well contained to the city and specifically south city (south of I64/40). The neighborhoods here run the gamut from very good to very bad, although I wouldn't classify any of south city as a war zone.
There is a lot of nuance to the St. Louis market. As others said, you can have a very high end property on one block and then go 2-3 blocks over and things are quite different. Having boots on the ground will be very important as you can't just trust the numbers on paper. I am working with @Peter MacKercher as well and he knows south city inside and out. It'd be well worth your time to reach out to him.
Thanks a lot for your analysis. I have been looking to do a quad/triplex and that's actually where I am heading to. I have only SFR and want to start small multies in STL. I have heard the podcast and i totally agree with him. It take same effort if not less to handle than smaller units. Same goes for lenders.
Investor · Belleville, IL · Member since 2016 · 16 posts · 3 votes
9y
I live 20 mins east of downtown Saint Louis and don't invest over there (yet) but I'm pretty familiar with the neighborhoods in general. It will be hard to determine what's good/decent or not without living here. School districts definitely aren't an indication for the most part because of how spotty the areas are. As others have said, I would personally avoid North City (pretty much anything north of Lindell Blvd and the Central West End).
For multi-family, I would suggest looking in the 63110, 63104, 63118 and 63116 areas in South City. University City (63130?) is probably good for multi-family also. I would also look near any of the universities. It pretty much just depends on your budget and the type of tenant you want to attract. In the "nicer" areas, a lot of multi-family properties have been converted to SFRs.
For SFRs, it's a bit harder to recommend areas. It really depends on your budget and desired type of neighborhood. You may be better off looking at O'Fallon, IL or Shiloh, IL and working with an agent or PM company to get military tenants stationed at Scott Air Force Base in Shiloh.
Your post introduces some very distinct perspective to this discussion, especially with the clarity on the histroy of STL......
The 2 STLs (City and county), do they have identical/similar markets? What are the major differences?
Finally, will you be able to provide further clarity on your advice-"St. Louis investors aren't dumb"
Thanks again
"City" (specifically South City) is mostly older brick multi-family whereas "County" is the outer areas that are mostly SFR neighborhoods. A few North County examples that you should be able to find good SFRs that cashflow are Florissant, Hazelwood, Ferguson (not as bad as the news will lead you to believe) and I believe St Ann. I have friends and family that have lived in these areas for years. These are actually cities not neighborhoods so you should be able to search using the names. As an investor, you're probably looking at more C-D (maybe even E) class neighborhoods in the "City" and B-C in the "County" examples I mentioned.
O'Fallon, IL · Member since 2016 · 14 posts · 14 votes
9y
St. Louis is a great market to be in as long as you have the right strategy for the submarket and property type you decide to focus on. There have been some great answers in this thread, but the specific zip codes and property types you are asking for will really depend on your strategy. Are you planning on buying properties for long-term (5+ year) holds? Are you going to self-manage, or hire a third-party management company? What type of neighborhood and tenant profile are you comfortable with?
You speak the truth! It drives me crazy when sellers don't identify their properties as South County vs North County or South City vs North City. Only St. Louis County... very deceptive because it makes a big difference! Like night and day.
Thanks for the insight. Looks like South 'City' is the area to focus for Multies. You have provide a failry wide range of zips to search...Thanks a again..