Beginner Multifamily property question, and buying out of state

General Real Estate Investing
1

Hello,

I’m new to REI and don’t actually own any of my own property yet. I have read a couple books on the subject, and have been browsing the web researching for awhile now, I’m very glad I found this website :-).

A little background

My father owns a couple properties around our home area in Wisconsin. He plans to retire from his day job in a few years and move to Florida. Our plan is to buy some property down there, have me move there now and manage it (i gotta get out of wisconsin ;-)), and kinda get to know the area better/find good some good deals/properties ect. Eventually I’d like to buy a couple more mulitfamily properties in my ‘farm area’, once we have one decent property under control and i’ve become more familiar with area.

I thought it would be good to start with a 2-4 unit multifamily building so it would be easier to finance (I think that’s a rule right? I can get owner occupied financing for multifamily units under 5?), but in looking, the cap rates and NOIs of 6 units and more seem so much higher when browsing on sites like loopnet, and there seems to also be a much bigger selection.

The main thing i’m concerned about now is getting a nice NOI, and bulding up some nice passive income compared to my risk (is this the main thing I should be concerned with? Or am I looking at the wrong pieces of the picture?).

So my first couple questions are.

  1. Does the easier financing of a smaller building, and easier management for a beginner outweigh the bigger cap rates/noi’s of the bigger buildings?

  2. How accurate are the NOIs and cap rates posted on sites like loopnet, I know I should also figure them out myself, but in general are they useful ballkparks that I should use to narrow down my choices?

  3. Does anyone have any advice for someone trying to buy property where they don’t live? I haven’t really chosen an area in Florida yet, but it seems like it might be a headache, every place has their bad areas, unfortunetly for an outsider they’re not always that easy to spot, any resources to use would be great. I will be travelling down there to look at some places in the near future, but when I currently live so far away, it’s not like I can drive down there once a week to check new properties out.

Also if anyone invests in florida real estate, any advice or tips would be great.

I hope that isn’t too much to ask for my first post :wink:

Thanks,
Kyle

2

5 unit buildings and greater fall under commercial financing. You have some more financing options for 4 and less. If you are just starting out, it’s probably better to start with something smaller to see if you like it and how you do with it.
Some properties are posted on loopnet, but have you checked the local MLS or Realtor.com?
If you’re worried about bad areas, some places have crime maps posted online you can look at. That would give you an idea of the activity of a certain area.
If you’re not going to be able to travel back and forth to look at properties, you’ll have to find someone who can inspect the place. I’d try to have a bunch of places lined up to look at and hopefully one of those will work out.
I don’t invest in FL, but have been told the insurance there can be pretty expensive because of hurricanes. Our main banking/insurance company won’t even insure a rental property there.

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www.zillow.com is also a really useful website when looking for properties, bad areas, comparing recent sales, shops, schools, mortage quotes, etc, etc

good luck and happy investing