All Forum Posts by: Lucas Miles

@Matt Haman Really depends on your goals. If your self managing, tenants that live in multifamily can be more difficult than SFR renters, but multifamily often produces more cash flow. Multifamily properties are typically valued based on income and expenses. If you find a property where rents are low, by increasing rents you increase cashflow and also create additional equity for yourself as the value of the property has now increased. This forced appreciation can be very powerful, and can allow exponential growth.

In my experience there is less investors in the 8-50 unit multifamily range. To large for the typical SFR investor and to small for larger investors. Lot of properties that are poorly managed, and rents that can be raised to match what the market is demanding.

@Corlin Anderson a lot depends on your financial situation and what your reasons are for investing in real estate. If you looking for additional income, to replace a job, etc, cash flow is likely what your looking for. If you don't need the additional income, looking to generate long term wealth, tax sheltering benefits, etc buying for appreciation may come more into play. In MN and WI I would focus on cash flow, over the long term real estate goes up in value and you'll likely see some appreciation. Appreciation however will not pay the bills in challenging times!

@Cory Dahlquist seems like the big decision is if you will move your family out of your current house or not. No one can ultimately answer that question for you. If you do decide your family will move, a great option is to "house hack", buy a small multifamily typically 2-4 units. There are different loan programs that only request 5% or less as a down payment. Live in one of the units and rent out the rest, this is a great way to get into and learn the rental game, and often live for free (tenants pay your mortgage, utilities, etc), maybe even make some positive cash flow.

I stared with a SFR, then a 5 unit, now getting into larger multifamily investments. If I started over, I wouldn't re-buy my first SFR, but it got me in the game! Your first deal usually isn't going to be life changing, but it will get your started. Find something that is undervalued, in a good neighborhood, and that won't bankrupt you when things don't go as planned, and take the leap. Feel free to reach out.

@Michael Lilburn welcome to BP and to Minnesota. I'm actively investing in the southern part of the state in cash flowing micro communities. What type of rentals are you looking for? Deals are out there, just have to get creative on finding them. I've had luck going directly to sellers through driving for dollars and searching online property tax records. Wish you the best!

@Eric Berkner management is often more challenging with smaller multifamiles. Highly location specific, but a lot of property managers won't manage smaller properties. The key is to find a management company that can effectively manage the size you are looking for. The big benefit of the ~8-~50 unit buildings is there are less buyers. To big for the typical SFR investor, and to small for the bigger players. With good systems and operations in place this middle ground can be a good place invest.

@Nicole Skorka Highly dependent on the situation for sure, but in the neighborhood of 10% is probably a good starting point. 

@Nicole Skorka 1. Bring in a partner who has the capital to fund the down payment. 2. Ask the seller to carry a 2nd mortgage for the 25% for a few years. 3. Seller financing, seller finances the majority of the purchase for X years, you don't come up with a smaller down payment. Or any form of combination of the above. 

@Rodney Lorenzo this is a great question. I think it really comes down to the type of person you are, your risk tolerance, your end goals, etc. For me it was easier to start on my own with smaller properties and learn the process, how to find deals, how to manage tenants, contractors, etc. These skills are very valuable even as I start to get into larger properties. With smaller deals when things go wrong, its a lot less expensive and you can personally deal with these additional costs. Without this experience missing something in due diligence on a larger property could become a much larger issue. I also think your chances of long term success are much better off starting small and continue to grow and get into bigger properties and syndication if you choose. Jumping right into larger syndication deals is a much larger hurdle to jump over, and may prevent you from ever getting started. Not to say for some people jumping into something large may be a better fit for them. 

That being said if you can find a great deal and have connections with more experienced investors, bring this deal to them and partner with them can be a great way to jumpstart your journey. You can learn the process with them while minimizing the risk of your inexperience. You will likely have to give up significant equity, but it will be worth it for the knowledge you will learn, and potential long term connections. 

@Christopher Murphy do some researching online in your local market for what a 2 beds and 1 beds are renting for. Things to consider are size/condition of the apartments, what utilities are includes, location, etc. Can also call a couple local property managers and have them give estimates on rent estimates. They can also help you understand if the location is good/okay/bad for finding quality tenants or anything to watch out for. 

@Hunter Crowder all three properties are for sale at the same time, and all are owned by different owners? This seems a little odd, have you checked that these aren't just owned by the same person in different entities? Are these listed on the MLS or have you been in contact directly with the seller(s)? If owned by the same person, you will likely get a better deal if you buy all three at once. If owned by different people, once you purchased one, it will likely be easier to buy the other 2 as you can sell those owners you just bought the one down the street.

If you don't have enough cash, have you talked with the seller about seller financing? Either 1. Seller finances the majority of the deal, 80%+ or so, whatever you can afford to put down (make sure to still have money saved in reserves). or 2. Would the seller carry a loan in 2nd position to the bank's 1st position loan. In this example bank gives you 80% of the purchase price, seller "lends" you 10% of the purchase price, and you have to come up with the remaining 10% at closing. Another option is to find a "money partner", someone who has money that could provide the down payment for you in exchange for a % of equity and cash flow.