Hey Everyone! I am new to the forum and am looking for some advice from successful investors. I have not invested as of yet but am looking forward to my first deal within a year if everything goes accordingly. I first wanted to find a duplex/fourplex to purchase and move on to small apt. buildings soon thereafter, but have read from a couple resources that you could start out with a small (20) unit apt complex, with virtually no money down, and be successful with it. Just wanted to see if that has been an experience of anyone here and maybe what their thoughts are about starting out with such a complex.
When were those sources written? You’re going to have to put something down on a complex. Most banks are going to want 25-30% down for a commercial loan. Starting out with a duplex/triplex/quad could be good, but I think 20 units is way too much to bite off in the beginning. If you screw things up, you’re doing it 20x over. Mistakes will be amplified. I’d get some experience first before you jump into the deep water. You’re on the outside looking in at this point. You may end up hating LL’ing.
I started with a 6 unit building and most people would probably advise against that.
I went from single family to 30 units on my first bump up. I felt secure about that move because I had a significant amount of prior management experience. It was a piece of cake for me to expand my management systems to include an apartment building. It was just 30 more files to look after, more or less. It was a full time effort for me, however, at the beginning because I bought a non-performing building. Not, “under performing.” Non-performing. In my case this included 20 deadbeats living in the building that would simply not pay me, plus about five vacant units, and five paying residents.
Frankly, the challenge was much easier than I anticipated. Most of the deadbeats moved out as soon as they discovered I meant business about collecting rents and taking names. What really helped jump start things was when I started towing dead vehicles from the premises that belonged to a couple of my deadbeats.
Then I started changing locks on what had appeared to be occupied apartments. But the real exhibition that put the fear of god in everyone’s hearts was when I threw colorful, “Susie’s” furniture off the 3rd story balcony onto the lawn. So elegant is my management style, yes?
Never mind it was a furnished apartment (by me). Well, the residents didn’t know any better and within about three weeks, the rents starting coming in, and a majority of the rest started evacuating on their own, without much more than a notice to pay or quit …or a good bye.
Some of the tenants had no deposits, and others owed more rent than they had in deposits on hand. I didn’t spend much time trying to collect the losses other than giving it to a collection agency, but the news that I was in fact putting rents owed to collection got around fast…!
Anyway, that’s more than you’re probably interested in, but it’s a 3-day weekend!
javipa, I love it, when I read you threw the furniture off the 3rd story balcony I thought, damn thats a good way to get into trouble,but it was your furniture, so no laws broken, and no one knew it was your furniture,Great way to make an impact on the others
I have to admit that I didn’t know the furniture was mine. I did know the tenant was dealing drugs …and she would never answer the door …was four months past due on the rent …and the police were looking for her.
So, that was enough to motivate me to take care of business without going to court first…
The police drove up to the pile of furniture on the lawn (and a mound of clothing) and asked my maintenance guy, who was “catching” everything on the ground, about the situation (more curious than legal, I’m sure). After my maintenance guy told them whose stuff it was, they had a big laugh over it, especially since they knew who it was, and the whole situation was so dramatic. They drove off only to be followed immediately by a car full of college students who saw all the furniture spread all over the lawn, and asked if they could have it for their apartment. It saved me taking it to the dumpster.
Afterward, my maintenance guy told me the furniture belonged to me!
I’ve never been so relieved and laughed so hard in my life!
WOW, Thanks for all the feedback, sorry I haven’t gotten around to replying till now!!
I started out this passion for getting into investing with the original thought of starting small, a 4plex for example, but the more I researched and read there are SOOO many places throwing so much info in your face (possibly with the intent to sell you something) that you almost wind up talking yourself into biting off more than you can chew!
I am on the outside looking in and have been trying to get in touch with and network with some individuals that have been successful in this field. I might not possibly like landlording but I am sure with compent property management, I will still reap the rewards without dealing with so much of the hassles. Or at least that is the plan.
I am still quite new to the real estate investing world and have been trying to read anything I can get my hands on. Are there any tips on resources that would help me just starting out, that possibly you guys have used?
I’d suggest reading every single post on this site in the Beginners and Rehabbling/LL’ing forums for starters. You’ll learn a lot just like that. You’ll also see the reality of most property management companies. It’s easy to look at rentals and think it’ll just be easy if someone else manages the properties for you, all people will pay on time and never tear anything up, etc. Reality is much different. If it were easy, everyone would be doing it.
There are many books out there about LL’ing. Many books have some great points, but there’s also a lot of stuff in there that doesn’t work so well in the real world.
Get some books and read on here too, but there’s no reason to pay any special money for someone’s program. Do your own research. You’ll learn a bunch and won’t break the bank doing it.