All Forum Posts by: John Woodrich

@Aaron Harren as others have mentioned your answer will depend on what your equity position is in each property. Because they are recent purchases your best bet may be to find a lender who will group them together and give you a separate LOC based on the equity. This may be tough to do if they are all at different banks.

@Scott Blackwill my comments come from my background of working with a lot of RE investor clients in my tax practice.  I currently have SF and smaller MF investments so completely understand your thinking on this.  I just want to point out that they are different business models and both have their positives and negatives.  The older I get (turn 35 next month lol) the more I value time.  Someone scaling a smaller investment portfolio is not going to create time, they are going to create a full time job.  I have several clients who have done this to themselves, they are happy and excited about the growth but they are creating more work to manage.  You can try to process up but it isn't as easy as it seems.  For this reason I don't want 75 properties to manage and I don't have goals based on number of doors.  My goals are on cash flow and creating time for family and other more enjoyable areas than property management.  

@Anthony Vargas here is how you do this - let's say your budget is $300k for a SF house.  Increase your price point to $400k and look for one with a mother-in-law apartment.  The bigger house will be in a better area, have nicer finishes, and help open up the idea.  

I know you said "most" but I wanted to help clarify - You don't have to be accredited to invest in a syndication, 506(b) will allow some non-accredited investors and there are some state specific crowd funding options for people looking to raise money from non-accredited investors.  But you are correct - many people who invest in these are accredited investors.

As @Todd Dexheimer mentioned - these are two different business models.  One requires you to be somewhat active and the other requires you to be entirely passive.  Investing in SF will have you spending time sourcing deals, dealing with tenant phone calls, completing your accounting, etc.  Even if you hired a property manager you will have to spend time away from your day gig going to closings, setting up accounts at the bank, etc.  Many of us who are obsessed with RE know that the clock doesn't stop to end the day, investing is a job as you to find properties to purchase and spend time walking them.

I don't know how you make money outside of RE but many people who invest in syndications do so as they know their time is best spent in other areas.  It is easier to continue their path being a great engineer, lawyer, etc. and doesn't make sense to spend a lot of time trying to analyze and source deals.  You can't be great at everything, at some point it will start to balance out.  Knowing this they hire an expert - a person with a proven track record to find deals and provide the financial analysis.

Another thing you have going with a syndication vs SF rental strategy is you are more in control of your investment.  The commercial property will be valued based on it's performance.  You can directly increase the value of a property by increasing rent and/or decreasing expenses.  SFRs are valued based on comparable sales, not performance.   You could have a very good performing rental but it will be valued by comparable properties which is out of your control.

The one push for SFRs is that you can re-leverage when you want.  If your syndication investment has a lot of equity you can't take your membership units to the bank and pull out more money against it.  However a responsible syndicator will be looking out for your best interest and if it makes sense they may refi with a cash distribution to investors.

Rentometer.com works OK in some areas but isn't great in others.  From what I hear the paid subscription is better if you want to check that out.  If you can't find a single property for rent I think you need to scour the internet a bit more. 

Another thing you could do if you can't find anything is post a for rent add on CL, FB, etc at your estimated price and see what responses you get.  That can work to see if there is some demand but you may be getting a read from the desperate people who wouldn't qualify to rent anyhow.

You sound a little secretive in your "location" but if you are willing to list what city you will get more help.  30 minutes from the cities isn't far and there are likely local investors who already invest there.

Like @Pavel U. we have a plow person who takes care of the driveways and sidewalks at our MF properties, SF tenants are on their own.  Instead of an email he sends them all a group text a half hour before getting there so they can move their cars.  If they don't move them they get plowed in.  He will then stop by after the vehicle has been moved to complete the clean up.

As Amber mentioned there are many large employers in the area and with it came a lot of new construction.  There is still room for appreciation but I think a lot of the appreciation on the older houses may have already happened.  Duplexes are a little different than SF houses but in Shakopee you are less likely to find many young professionals who will want to owner occupy and make the drive over the river everyday. 

If I were in your shoes I would try to get a feel of what you can sell it for and see what they money could buy you in other areas if you are not local.

My wife wouldn't go for living with tenants until I cracked her - just had to buy a bigger house with a separate mother-in-law unit. 

I wasn't looking to change her opinion, the option came up when we found a house we wanted and needed to move fast.

@Morgan Wells nobody will be able to give you a good number as I am sure there was more to it than writing a contract.  On your next deal I would reach out to @Brad Schaeppi, he only works in RE law so is efficient and also looks at it from a practical standpoint as he is also an investor.