I currently live in south florida…the prices for multi-family units are so high that it is almost impossible to make any positive cash flow. My question is this, what are the risks in purchasing an out of town apartment complex and having a management company run it. Can enough profit be maid to do this??
Howdy Sandeja 16:
It cost the same pretty much anywhere to hire a management company around 5 to 6 % of the gross rents. If the property is large enough you can afford to hire on site staff to handle management. Most far away owners still hire management companies. There are a lot of what if’s that could happen with just hiring a single manager. You would want a company with a good reputation.
You may also consider being a partner in a deal or buying stock in an REIT or other form of more passive real estate investing if the management bothers you. Buying notes at discount and being a hard money lender or private money lender are a few other ways to make cash flow from your funds.
I am closing next week on my 31 unit deal that is about an hour and a half from my home. I plan on keeping the existing manager and be the property manager until I get it rehabbed and resold. I am probably a lot closer to my property than you will be to where you want to invest. I may sell it to a partnership also and retain a % of the deal and still be involved in the deal.
Hope you find a good idea above somewhere
adding alittle more info to my queston…I have an equity partner that is willing to lend me the hard money for the downpayment at a very favorable rate…this will be my first property so I was trying to cut as many corners as possible so I could quit my job and start rental property full time…the problem is, since I am financing the property 100% (due to barrowing the DP) I am having trouble finding property in south florida that is kicking off enough cash flow to survive on…Is there any other angle that I could take…this equity partner of mine is helping me out alot and I am still having trouble getting started
I was just reading that in another post or somewhere. Maybe forget rentals and do rehabs. I actually like rehab and resell rental units. House rehabbs work too. I did not do too well with a condo rehab and lost a good hard money lender. Not my first loser in my life but not my wife of almost 28 years now.
Keep searching and you will find your spot. If not come and join me or I will join you there where it is a bit warmer
I am also in south FL. Have just started looking for multi-units and agree the cap rates are low compared to other states. Have you mentored under anyone locally or otherwise for buying multi-units. I saw David Lindahl in Palm Beach. Have’nt purchased his course, you? Have you heard of Marc Garrison?
I have a mentor in Baltimore…he owns aprox 800 units and has been very helpful…I really think the market in south florida is just to high at this moment…if you aren’t paying cash for a property you can’t make any money
I don’t know anything about Dave Lindahl other than what I’ve learned on the REIClub conference calls and an article in Creative Real Estate Lifestyles. But I do know about Marc Garrison.
Lindahl and Garrison both teach about investing in areas outside of your home market. Unfortunately I went on one of Garrison’s buying tours and it was a complete waste of time and money–a lot of money. Instead of teaching people anything on the tour, he finds ways of trying to get more money out of people and lying to get out of being available. He even told us he couldn’t be on the bus tour one day because his wife was ill and might need to go to the hospital. When we saw her in that evening she couldn’t understand why everyone kept asking her if she was feeling better, because she had been feeling fine all day! Apparently he forgot to fill her in on his lie.
Many people on the tour were convinced that Garrison is nothing but a scam artist. Hopefully Lindahl is the real deal.
you should expect to invest out of town/out of state if your goal is to be successful. Knowing the market cycles and where to invest is key.