I am wondering if those who are negative on multi-family buildings have actually owned one. It is not buying a job and, if done right, is an incredibly easy way to build wealth. I own a few Apt buildings, each with 4-6 units. I put in about an hour a month on each building. Mostly book-keeping. Ocassionally a repair is needed or a new tenant needs to be found, and yes, once in a while I get a problem tenant. So what. Even in a bad month, I have never put in more than 10 hours. In return I get: 1. An appreciating asset (apt buildings do not decrease in value when rents are going up). 2. The tenants are paying all the bills and mortgages, thereby increasing my equity. 3. Small positive cash flow on the buildings that still have a mortgage and big positive cash flow on the building that is paid off. 4. Guaranteed retirement income for life. I was fortunate enough to have put together "no money out of pocket" deals, so my ROI is infinite. But even if I had to put down 20% I still would have a great ROI. All this for a few hours a month. And if I get real lazy, I'll hire a management company for 5%. I say, if you have found a good property, in a good area, and put together a deal that at least breaks even - go for it.
It depends what you are doing where. If you're buying multi-family near a hospital and intend to rent to doctors, nurses, teachers, etc. that's one thing. If you're buying multi-family in a gehtto to rent to Section 8 tenants, that's a whole nother thing. If you're buying multi-family in a middle class area you may get somewhere near a mix of the two. There will always be unexpected events. People die. Fires happen. Normal middle class people develop drug habits. People get divorced. Some people just crack for no apparent reason. For 15 years I was the building administrator for a very large and diverse city on the east coast. I have seen it all; plenty of dead people, fires, firebombings (domestic events), hurricanes, water rot from lack of maintenance, etc. and on and on. I have done demolition orders on not less then 300 dwelling units some only because the tenants destroyed them. I'm not trying to scare you off; plenty of people make a good living doing rentals. But then there are those as described above. Don't hesitate to charge an application fee and do a thorough background check on every tenant. Regardless of how good your tenants are, there will be some problems. If you have 1 unit you have problems with 100% of your units when something goes south. If you have 100 units you have problems with 1% of your units when something goes south. I know plenty of people who own thousands of units and they do good with them. It seems to be the smaller investors who get taken out when things go against them. An investor with 1,000 units can afford to have one be demolished by government and still do fine while someone with only a few units can get burned bad if there's a big fire or some tenants destroy something. Hope this helps.
One thing I forgot to mention. A friend of mine owns some waterfront rental property. He was getting $2,500/ month in 2005. This year he's been getting $550 per month because that's all the market will bear. He called 2 weeks ago asking what it would take to tear it down to get it off the tax rolls. Sounds like he can't rent it or just wants to sit on the land. I advised him to donate it to the fire department for training (burining) to get the tax deduction. I know several investors who have done that. If you're looking at jumping into a market where housing or employment is tanking, be preprared.
I agree. It's so labor intensive if you manage yourself and if you factor in your time, it's probably a wash.
Who said "no money down?" I said no money out of pocket. There is a difference. Many sellers of rental units are happy to carry 80%. It saves them from getting hit hard with Cap Gains all at once, plus they get a good rate of return. The trick is coming up with the other 20%. Loan against another building, home equity, private financing. I have used all three.
Real estate conditions have to be just right to be a successful slumlord, it is a natural occuring progression of an urban area and serves a purpose (if you can believe that).
Yes; and I try to offer the best rates & service in the area. I have never dissed the concept of people earning money. I insist that people pay taxes at progressively higher rates and I have no problem with society providing a basic standard of living of all can be assured. What does ' ' mean?