I am a Accountant and my partner is a Attorney, both would no experience in the real estate industry. Should our first investment be a apartment complex or should we focus on housing?
IMO - a beginning investment foe a newbie should never be a “complex”. You have the basics of the accounting piece and the legal piece but are you ready for the tenants? Probably not.
Keith
If you have never dealt with tenants, you can’t even imagine how badly they are capable of behaving. To start with a large complex when you have no experience with making tenants behave, would be an interesting learning eexperience, to say the least.
I’d stick will less than 8-10 units. You can probably get the financing given your professional positions that you currently hold. Once you spend little bit of time learning how things work then move your way on up. The hard part will be finding the properties that make sense. Good luck.
It depends, are you planning on managing yourself? How big are your goals? Do you have a lot of cash to invest?
For most people it is wise to start with one house and work your way up. On the other hand if you are already successful at running business, have a lot of capital, and understand how to find the right people for the job of managing, then there is no reason that you can’t move faster, provided you get educated and get people with experience involved. DO NOT GO BIG without having anyone with lots of experience with tenants on board, either as a partner or as a very reputable, strong management company.
DB
I agree that it depends on whether you plan to manage it yourself or not. If you want to manage it yourself, start small, preferably less than 8 units, better yet, a triplex or duplex.
However, as busy professionals, you might consider getting professional management to run your properties. In that case, make sure you get one with a CPM (Certified Property Manager) designation, and check them out to make sure their fees are worth their service. My expereience are that property managers with the lowest and highest fees are the worst, oddly enough. The best PMs I have experienced are CPMs with moderate fees.
Being a landlord is a job in itself. Evictions, maintenance, contractors, tenants, paperwork. Save a few bucks and do the accounting and attorney work yourselves and hire a property management company and just be an investor/owner.
For starters, maybe you should consider being a hard money lender. Less tenant/maintenance headaches, good cash flow. If they don’t pay, you end up with the property! With your two professions, you will be pretty busy, anyway, and these dovetail nicely into hard money lending.
cece3679
Over the course of the past thirty years, an ever growing number of people from different walks of life have elected to become involved in real estate investment. These men and women have determined that adding real estate investments to their overall financial portfolio would serve a number of useful, beneficial and profitable purposes. In this regard, a significant number of real estate investors have elected to put their money into multi-family residential properties.
If you are considering investing in real estate yourself, you will want to take a look at the pros and cons of putting your money into multi-family properties. In this regard, the reality is that you likely will find that you can realize some important benefits from putting some of your own money into multi-family investment properties.
The first factor that you need to consider when you are contemplating an investment in multi-family property is the size of the property itself. The bottom line is that multi-family properties run from simple duplexes to apartment buildings with multiple units. Needless to say, as the number of individual units in a multi-family property increase, so will your responsibilities, obligations and duties.
Second, your own real estate investment experience comes into play when you are considering the purchase of a multi-family property. Therefore, you need to seriously analyze your own capabilities in light of the responsibilities you will assume if you purchase a multi-family property. If your experience (and time) is limited, you will want to make sure that you look for an appropriate manager or management company to assist you with the duties of running and overseeing the property in question.
Third, before you make a purchase of any multi-family property, you need to make absolutely certain that you obtain appropriate independent inspections of the property at issue. You will want to make sure that you engage and utilize the services of a certified inspector always. These are inspectors that have the necessary experience and training to undertake an appropriate inspection of the real estate you are considering purchasing. You cannot rely on an inspection that was performed by the seller’s inspector and without your involvement and participation.
By paying attention to these consideration, you will be in the best possible position to begin a course of investing in and owning multi-family real estate on the right foot. You will be putting yourself on a course for making a nice income through your multi-family real estate investment.
Richard Stephens
By paying attention to these consideration, you will be in the best possible position to begin a course of investing in and owning multi-family real estate on the right foot. You will be putting yourself on a course for making a nice income through your multi-family real estate investment.
…but by far the MOST IMPORTANT consideration if buying any rental property should be the numbers! Buy at the wrong price; fail to understand the real world operating expenses; and fail to understand cash flow issues and you are destined to fail, like the vast majority of other real estate newbies.
Good Luck,
Mike
You have a great point, but since they are an Attorney & an Accountant they are sure to know that already. Besides, I like to leave a little to the imagination when I write articles… it gives people a reason to want to return and read more.
Richard Stephens
You have a great point, but since they are an Attorney & an Accountant they are sure to know that already.
Most attorneys and accountants know absolutely nothing about the operating expenses and cash flow issues associated with rental properties and I certainly wouldn’t assume otherwise.
Mike
It doesn’t matter how clean the place is or when it was built. If you cant run the proper numbers for that location/market, your expenses will be wrong and you will not be able to make an educated offer and may not buy at the right price. I think it is a science. And people have different ways of running the numbers, as we have seen on this forum.