Originally posted by @Dan H.:
Originally posted by @Syed H.:
Originally posted by @Dan H.:
Originally posted by @Syed H.:
Originally posted by @Dan H.:
@CJ M. If you can self manage 20 of these you are still only at $4K month. That will likely be close to a full time job and not a good paying one. Lets say you really want to work this and you can self manage 30 of these then you are up to $6K month, still not a good paying job. Lets say you want to work very hard and can self manage 40 of these for $8K month, still not a great paying job.
If done properly & efficiently, you can easily self-manage with less than 10-20 hours/month on average.
How many units do you think you can self manage at 10 to 20 hours/month? We spend enough hours managing our units that my wife qualifies as an RE professional (>750 hours/year). Some of this is that we purchase value add properties, but most of it just general rental managing activities.
So I self manage 21 units right now. I am 2 hours away from the properties. I spend 10-20 hours/month on average including my 4 hour roundtrip drive there. The only reason I spent closer to 20 some months is when I'm dealing with city inspections and/or new acquisitions.
I believe I can manage 50-60 units like this with minimal extra hours, goal is a few hundred tho.
The key is to build systems. Spend the time to track the rents correctly, get a PO Box for rent, get 2-3 handymen close by, have them send you pictures of any work done, focus on mitigating vacancy & turnover.
Your being very efficient with your management. We have about the same number units but do not self manage all of them (we self manage almost all). We have fairly efficient processes that works until a larger item occurs (this month it was a shower pan failure). Between the two of us we are likely close to 1000 hours/year and more if we perform some large value adds.
However, lets use the 60 number of units you provided (the higher number from the range you provided) at $200/month. Cash flow would be $144K/year but you have a lot of capital invested that if even in a passive investment such as the S&P would provide return on that money. Lifetime S&P return is just below 10%. If we use $10K invested per property (20% of the lower of the OP price range) and a 10% S&P return (approximate lifetime rate of return of the S&P) would produce by $60K. So now you are managing 60 properties for $84K ($144K - $60K) above an easy passive investment.
That is not for me. I strive for about that return year 1 of a single purchase and mostly have achieved it.
My view is the OP either has to increase his cash flow significantly ($400/unit could work) or invest in a locale with historical appreciation that is above the inflation rate to obtain a return that is likely to be impactful to his life. Adding in some value adds for one time increase in return (difficult via turnkey) could also help make an impactful difference.
Simply managing units at $200/unit per month will not get him very far unless he goes true multifamily (A 50 unit apartment at $200/unit would provide a meaningful return and can scale).
Yes so you make $84,000 for a 240 hour investment per year according to my numbers. That's $350/hr. That also doesn't include your principal payments and any potential appreciation. But let's say theres no appreciation for simplicity.
My principal payments are probably $75/unit/month.
So you get $275/unit/month = $198,000. 198 - 60k (s&p investment) = $138,000 for 240 hrs = $575/hr.
I'm returning 18% right now COC with 25% down on a 20 year amortization. Soon I will refi and take out all my equity. After that point I outpace any index fund because I have cash flow with $0 invested. But I never count on this because you are beholden to the debt market.
Now I agree with you large MF is much better. I invest in small MF for a variety of reasons(3-15 units would be my ideal). I stay away from SFR, but it does work as long as you properly account for Capex.
Also my goal is to eventually bring in staff in-house and grow to 200+ units.
Do you have or see investments that net you $400/month? I'd be curious to see them. Like I've said before, in todays market I haven't seen an accurately underwritten market deal that you nets $400+/month. At least not in a decent market.
