All Forum Posts by: Dustin Beam

I like to preface my advice w/ the "I'm new to this, so take my thoughts with a grain of salt". So with that said....

Although my property is multi family and likely, most property I purchase going forward will be the same, I do like one thing in particular when it comes to SFH and duplexes: you have a better shot at selling at retail prices and quicker because you'll be marketing to normal home owners, not investors. Granted, someone might buy a fourplex to live in and rent 3 out, but that's a specialized buyer.

Plus w/ a duplex, depending on how it's set up, you might be able to get the tenant's to pay for trash, water, and take care of the lawn, snow removal, etc.

There are definite benefits to larger multi family as well, like a single roof for mulitiple units, consilidation of location, maybe cashflow, etc.

And one more thing real quick, if you don't already know, financing might be different if you get a 5 unit or higher. Those will be commercial. You should have the option to go traditional or commercial on smaller multi units, but just be aware that it will be commercial if 5 or more.

Fair enough assessment from all. I'll temper the thought of expanding for a while unless something too good to pass up comes along unexpectedly.

Thanks

 Realistically, I'll probably hold out for a while. But my motivation isn't really quitting my job per se, but more to free up my time to focus on my property without taking a pay cut. If that makes sense.

I certainly won't argue that point as I have no experience with it, but i have heard people speak about it on podcasts so I  assumed it was possible.

Hey Conor, I'd prefer to stay on topic,but feel free to message me and i can fill you in on the details.

Hello beautiful people of BP,

So I'm a pretty new investor, purchased 12 units two months ago. They have kept me pretty busy as I try and develop systems and meet people that can keep me from fixing all the little problems that pop up.

At the same time, I've actually already considered looking into getting more. It wouldn't be easy, even if I decide that's what I want, because it will require some sort of owner financing. Whether that be 100% or a more realistic 20% with the other 80% from the bank. For the sake of argument, let's assume I can swing that.

For me, taking another 12 would be scarier than taking 40 more units. Let me explain. On the one hand, 12 is something that I at least have some idea what I'm dealing with and it would be less debt over my head. But on the other hand, it presents twice the problems to deal with and it wouldn't be enough for me to quit my job.

If I picked up something like 40 units, I could quit my job and probably have more free time than I do now to focus on the real estate. The downside, is that 40+ units is different than 12, so I steepen my learning curve.

Any thoughts from the experienced out there? Is it something I should entertain over the next 6 months or just chill out for a year or so and gain experience?

 I plan to keep long term, but that obviously could change. And on the surface, rent going up is a good deal. But say, for example, the flooring only lasts 4 years. Well at that point the raised rent might yield me a little more profit but it's mostly spent on the upgrades and replacing the upgrades. 

I'm just curious if there's a certain percentage people put on their upgrades to where it makes sense. 

Thanks @Mike Dymski, and I have thought about that. I did a limited renovation to one apartment. Painted all the ceilings, all walls, replaced carpet with vinyl plank flooring, and replaced kitchen countertops. I rented it out for $50 more than it was rented prior. 

The tenant told me twice the apartment was better than what others had to offer in the area, so I'm hoping I can do the same again and charge a little more. Materials were around $1500 or so, but I did it myself and free family labor haha. I won't do that again, so I figure double it for the labor. 

So what numbers/returns do you use when updating your units? To me it's not as simple as regular ROI calcs because the upgraded don't last forever.

My apartments are a little tired and I'm hoping I can get an extra $100/mo. Not sure if I can get that much extra by fixing it up, but if I can I may have to spend 3-4k on each to do it. That would roughly be 33% ROI, but if a tenant moves out after a year or two, I would likely need to spend more money, thus extending my break even time.

Thoughts?

I'm a new investment property owner, but I consider COC return to be almost the only thing that truly matters. For the most part anyway, there are always other considerations.

If you get a sweet deal like 100% owner financing, you have to look at other factors of course.