All Forum Posts by: Steve A.

Which companies would you recommend calling, to get a commercial broker? Or do you have one you’d recommend? It just seems much easier for me to quickly source and offer on 1-4 unit properties, whereas I can’t find any 5+ unit ones, but maybe that’s because the commercial brokerages have all of them.

Hey everyone,

I bought a lot of property in the Indianapolis area in 2013/14. Since then my main, unrelated business tied up funds for years. It was worth it, as now substantial cash is releasing. The industry is volatile and unpredictable, I count myself lucky to have made it this far, and don’t want to rely on this income in the future. I would like to have a portfolio of rentals netting >$200k annually and then I can rest easier. 

However I find that the market is in a much different place than it was back then. Whereas before finding 12-cap properties was easy, the same properties are now 7-8 cap. I’ve heard (this may or may not be true) to never buy under 8 cap. Some properties I am considering are  in decent areas and renovated, but they are mid-7s, so I am considering those despite my better judgment. The 8-9 cap range seems to be in questionable areas and somewhat dumpy properties. Note that I only look at properties that are virtually turnkey—clean carpet or vinyl “wood” floors, reasonable interior condition etc. 

I then considered going to a different market, even though I was hoping to greatly expand my indianapolis portfolio as I have trusted property management in place. I took a look at memphisinvest.com, which has access to several markets and is turnkey, but was disheartened. Their "ROI" figures are low at 5-7% even for the lesser cities, and on closer inspection these ROI numbers do not represent a reasonable cap rate, which would be even lower. Now they might argue their tenants stay for many years so vacancy is almost nonexistent, but I am skeptical of this kind of thing.

Is there any major metro in the country that is not a Detroit or Chicago where 10+ cap on a C level duplex or something is achievable?

I am also unsure if I should even be piddling around with buying duplexes and SFRs. I have substantial cash to invest...7 figures...and have heard several times in this forum that buying an apartment building/complex is far superior to buying SFRs. However I fail to see how this is true at the scale at which I would be capable of buying...in my price range the properties would not be large enough to merit their own on-site Management, unless maybe I just bought one and bet my entire future on it. I would be looking at small to medium sized multi family, which seem to behave very similarly to the duplexes that I like to buy. 

I am nervous that I am going to squander all this cash I worked so hard to make, by buying the wrong property type or buying at the wrong time.

Without guidance, the current strategy is to comb the listings in Indy lookng for turnkey 8+ caps. If I dumped all my cash into this (I also have stocks and crypto etc, so I am diversified) I could in theory generate enough income to reach my goal, however I am nervous that buying in a different metro may have been a much better option, or buying C grade SFRs and duplexes in a peaky market will comeback to ruin me, or buying apartment buildings / complexes would have been a much better option.

Also if I want to buy apartments, how do I accomplish that? It’s  not as easy as loading up Zillow and combing through. Loopnet seems to be garbage. A commercial broker seems like maybe an option but I believe they are limited to the state in which they operate? So if I want to cast a wide net and search in several metros, I would need to have like five different brokers searching for me? Is that correct? I see some commercial properties on here but most seem to be either 1) gigantic and out of my range or 2) quirky. I prefer simple, uniform properties, not ones that require tons of work, creativity, or time investment. I Ann just too busy running my main businesses for now.

Can anyone give me some guidance?

If it was still 2013 I could just dump all the money in Indy SFRs/duplexes and fall it a day, easily.

I have quite a few properties in the Indianapolis area, but I haven't invested since roughly 2014 due to focusing on another business. I'm ready to begin investing again, but I know things have changed quite a bit since 4 years ago. Back then it seemed like the best major metro areas to invest for CASH FLOW purposes were:  Indianapolis, Memphis, Kansas City, Oklahoma City, and maybe some cities in Ohio.  Can't remember if I'm missing anything.  I'm not really interested in anything other than major metro areas. 

What are the best locations to invest in now?  For cash flow purposes. 

thanks for the words of caution, I take no offense. She is bright and capable so I'm not too worried. My main business is unaffected, the risk would be compartmentalized to one property in the real estate business (which is small compared to the one I own in another industry) which to me is not a big deal. If we lose a little or break even on the first one it is just a learning experience. Most of my business experiences have been iterative problem solving anyway. I started all my companies with zero experience. We are however reading J Scott's 123 Flip book together. 

I don't want to see her get into debt and slave away in corporate America, or spin her wheels at some retail/service job. She is a great girl and I never expected a potential partner to be financially independent at a young age like I am, it just isn't realistic. So I need to work with what I've got and I feel like flipping houses and splitting the profit 50/50 with me fronting the money and her doing most of the work (eventually) is a fair arrangement. Just wondering if there may be some other possibilities I've overlooked. 

hadn't considered that, thanks Nina, I will look into that

Hi!

I own a lucrative business in a non real estate industry. I was able to start it because my original business was/is buy and hold rentals, which freed me from a job. Now that I have cash to invest, I am looking to really expand my real estate operation, as my other business has basically hit maximum scale.

The buy and hold rental business comes very easily to me and will be a component, but now life is a bit different as I have a committed girlfriend. She is free to do whatever she wishes as far as a career (we are somewhat young, im 31 and she is 22) but she seems to have a strong interest in my businesses and real estate in particular. We travel often and my lifestyle is completely location independent, so we are strategizing a way for her to make some money while not needing to be physically present at all times. I could see, if she became for example a realtor, being unable to visit family or travel due to an upcoming closing. On the contrary, with something like a flip, we could shelve our projects for a week (no carrying costs, not using loans) and pick up where we left off when we feel like it.

I am essentially looking for a way she can provide me with a good ROI from her efforts while she takes a significant cut of the profits. I really have nothing I can pay her for on an hourly basis as my businesses are nearly passive / automated. And paying her an hourly wage would probably bore her (she is very driven and likes commission jobs) and wouldn't allow her to accumulate $$$ of her own quickly enough. My goal is to get her to a point where she can invest in her own buy and holds and achieve her own financial independence. I have enough that I could support us for the rest of our lives, but she is 22 and hungry for her own success and I like that.

The first thing that comes to mind is having her do flips. I could buy a distressed property in cash and set her to work on it, with an agreement to split the profit 50/50 or whatever. I have my own projects I'd like to do, and if she is generating cash for me on these properties without me having to spend much time on them myself, I think it's a fair deal. She is currently between jobs so I figured this is the ideal time to figure something out, because if she went and "worked for the man" it would really restrict our lifestyle.

It really blew her mind when I told her one flip could make her as much as she made in a year of working at her previous job.

Then there's becoming an agent, but I worry this may end up being too restrictive and job-like, becoming a wholesaler (really no idea what is involved here), or appraising/loans etc but those are jobs. Have also thought about giving her a small finder's fee for combing the listings to find properties that meet my exact specifications for my buy and holds.

Does anyone have any other ideas as far as real estate related opportunities for her or has anyone been in a similar situation?

Also we live near Clearwater, FL. Not sure if that region is currently ripe for flipping or not.  My buy and holds are in Indianapolis. 

Looks like the nifty name populator didn't work on my phone @Shawn Holsapple  there we go

hey Shawn!

I was just about to PM you thanking you for your help in the past. I used the Visio company you recommended. Super expensive, but I had stumbled on a time sensitive, killer deal (5% rule).

I can't use them for buy and hold though (I quickly paid off the visio loan). 

Would you by chance be comfortable PMing me the names of the banks you use, maybe even loan officers? Union savings bank is a remote possibility, but it's a slim chance after speaking with them. IU Credit Union may be able to accommodate me...I will talk to them tomorrow after the holiday. Forum credit union says they don't have a portfolio loan division. Which stinks because I have a great relationship with them.

I will also be contacting you to source some properties once I am ready to go here in a few months, pending financing.

I should also mention I live and buy in indianapolis 

thanks for the reply, @Will Mitchell . However, I am a buy and hold guy and those rates and terms would not work.

Bob sent me a very attractive blanket loan proposal.

Is there by chance any lender who does these property by individual property, just like a conventional loan but without as many rules?