All Forum Posts by: Lucas Miles

@Ian Murray without knowing all the numbers/details your CoC estimates seem pretty high. Numbers on 4-plex, if you assume 50% rule (50% of income will be used to pay expenses) leaves you with $1200/month, your debt service will be around $900/month. Leaves you $300/month profit. $3600 per year / $45,000 is an 8% CoC. Not to say that this is more accurate than your numbers, or that a 8% CoC is bad, but I think worth a second look at your numbers.

I always like to look at the "value add" piece when it comes to this. Which property gives you the best value add play (raise rents, decrease expenses, etc)? Location is definitely a factor, which properties are in the better areas? What properties will need more/less Capex type input (roof, siding, etc) right away that will affect your return? Personally I would rather own a 4-plex than 2 duplexes (half as many roofs, siding, driveways, lawns, etc) economies of scale are in your favor. Just a few things to consider.

@Donovan Haynes If you are able to walk through the property before getting it under contract (recommend doing this if your inexperienced) then have a contractor (or someone with more experience) walk the property with you to get an idea of what the property needs and ballpark estimates. Once you get the property under contract then hire a licensed inspector to perform a formal inspection, to inspect the property in much more detail. 

This being said, don't waste a contractors time with walking a property with you unless you are serious about purchasing and already have financing arranged. Inspectors generally do not give estimate on repairs but can probably give you a ball park idea or what to look out for. 

@Kaylea Blackburn before you spend any time finding a property to buy, make sure you have a plan and are able to close on a property. Get preapproved from a lender for whatever type of loan you decide to go with. Once you have you finances in place and have the ability to close then find a property. 

Driving for dollars is a good way to find your first deal (drive neighborhoods and look for distressed properties). Connecting with local agents who have experience working with investors is also a great way to start. This can also be a good way to find a lender in your area that can help you with financing. 

@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.