All Forum Posts by: Douglas Skipworth

Hi, @Patrick Tutor.

Welcome to BiggerPockets!

Be sure to check out the blogs and podcasts as well as the forums.  You can learn a ton from the real estate experts on the site.

Best of luck to you!

@David Hodge,

Most investors in our area don't use cap rates for duplexes, triplexes, or quadplexes (however, I have recently seen 6% to 14% cap rates for larger apartment complexes).  

Instead, I have seen duplex investors focus on Cost-Per-Unit and/or Gross Rent Multipliers (GRM).

For example, I just saw a duplex in a C area listed for $54,900 that has income of $1,100 total ($550 per side), which is $27,450 per unit or GRM of 50. (Personally, I think the price is too high for that area.)

Also, with most 2-4 units, you are able to off load the utilities and yard maintenance to the residents.  Once you get to 5-unit apartment complex, the owner usually picks up some to all of the utilities and landscaping.

Great questions!  Keep them coming.

@Scott Schaeffer,

I am not an attorney nor do I give tax advice, but I have always been told that you do not want to own real estate in a C-Corporation.

Also, real estate investing can be classified as "passive income" while rehabbing and flipping can be viewed as "active."  I recommend that you ask your CPA about whether you want to keep all of those activities in one entity or perhaps separate it into at least two.  I do not know the best answer for you, but I know that if you share you goals and plans a good CPA or attorney should be help to lay out all the pros and cons for you.

Sounds like you're on the right track already!

You're welcome.

Hello, @Rico Donald.

Welcome to BiggerPockets!

Be sure to check out the blogs and podcasts as well as the forums.  You can learn a ton from the real estate experts on the site.

Best of luck to you!

Hello, @Scott Schaeffer.

What is your company going to do (eg, wholesale, flip, buy and hold, manage, etc.)?

Once you determine exactly what you are trying to accomplish, a good attorney or tax accountant can give you the pros and cons of every legal entity option.

Usually, it is pretty easy to decide the structure once you know the end game.

All the best,

Hi, @Scott Schaeffer.

Welcome to BP.

Be sure to check out the blogs and podcasts as well as the forums.  You can learn a ton from the real estate experts on the site.

Best of luck to you!

Hi, @Worth Woodyard.

Welcome to BiggerPockets!

Be sure to check out the blogs and podcasts in addition to the forums. You can learn a ton from all of the real estate experts on the site.

By the way, I know your dad and Lea Heilig in his office.  They are first class!

Best of luck to you!

@Vivian Hernandez,

You've got a bunch of great info above from all the BP turnkey experts, especially about performing due diligence on the property, the neighborhood, and the management company.

The only other thing I'd add is that turnkey investing is a long-term real estate strategy, not a short-term make-a-quick-buck plan.  

Said another way, if you buy a turnkey property you are likely going to be paying full price (because the turnkey service provider has earned it by assuming the initial risk and doing lots of work), which means can be hard (if not impossible) to sell the turnkey house for a profit immediately after you have purchased it.  There are several horror story posts on BP about owners buying turnkey and then trying to sell in the first couple of years.  I'd advise you to read a couple of those posts just to make sure that you're really going to commit to the long haul, which is what turnkey requires.

Best of luck to you!

Hi, @David Hodge.

Class B multi-units (2-4 doors) are great in Memphis if you can find them.

We own and/or manage over 100 duplexes, triplexes, and quadplexes (A, B, and C's) and I'm not joking when I tell you that some of the residents in those units have lived there longer than 25 years (mostly in the B and C areas, though)!  

Of course, there are other units that turn over every year.

Berclair (38122) is a great B neighborhood where we have had tons of success with duplexes. Unfortunately, there are not many for sale these days.

We've also had good luck in Midtown (38104) with 2-4 units, but sometimes they are A properties because of where they are located (several areas in Midtown are very hot right now).

There are also pockets of 38111 that have a few nice duplexes.

Again, the hard part is finding one for sale at the right price.

I asked the Assessor's office one time and they told me that there are roughly 6,000 2-4 unit properties in Shelby County (compared to about 300,000 single family).

A local Realtor could easily pull a list of all the 2-4 unit listings in the local MLS. And, you could also ask around for pocket listings of duplexes, too.

Be sure to ask the BP community when you find some to make sure you are looking at B properties and not C properties that someone is trying to tell you is a B.

Overall, I think multi-units can be an awesome investment if you find the right property.

All the best,