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Author Topic: Small apartment buildings  (Read 183 times)

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Karma

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Small apartment buildings
« on: October 15, 2017, 09:11:20 pm »

Has anyone invested in smaller apartment buildings, i.e. 4 - 16 units? I'm looking to get into this in Central Arkansas.
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ricepig

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Re: Small apartment buildings
« Reply #1 on: October 16, 2017, 10:06:15 am »

Has anyone invested in smaller apartment buildings, i.e. 4 - 16 units? I'm looking to get into this in Central Arkansas.

Nope, I keep my commercial real estate investments to businesses, generally Fortune 500 companies and I have a NNN lease. I prefer less money with more security. I know you can make more on apartments, but I don't want to mess with tenants, background checks, and all the other hassles that goes with residential leasing.
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onebadrubi

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Re: Small apartment buildings
« Reply #2 on: October 16, 2017, 09:24:14 pm »

Duplex's are where it's at I've been told.  One side should pay the bills, the other side should be profit...  But if it is just that easy then why are not a lot more doing it?
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ricepig

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Re: Small apartment buildings
« Reply #3 on: October 17, 2017, 01:33:59 pm »

Duplex's are where it's at I've been told.  One side should pay the bills, the other side should be profit...  But if it is just that easy then why are not a lot more doing it?

Zoning, tenants, headaches......
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hog.goblin

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Re: Small apartment buildings
« Reply #4 on: October 17, 2017, 03:41:01 pm »

Iím not a fan of single family rentals, duplexes, or small apartments.  Money can be made, but itís also a great way to make about 1 - 3% over time.

Apartments with around 60 units or more is where itís at.  However, you need to have people in place to do all things rice said arenít fun.  Because they arenít fun but critical.
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Karma

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Re: Small apartment buildings
« Reply #5 on: October 17, 2017, 08:02:16 pm »

Iím not a fan of single family rentals, duplexes, or small apartments.  Money can be made, but itís also a great way to make about 1 - 3% over time.

Apartments with around 60 units or more is where itís at.  However, you need to have people in place to do all things rice said arenít fun.  Because they arenít fun but critical.
Interesting. 60 units is a major entry point.

When a property is cash flowing, why do you only make 1-3%? Unexpected expenses?
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hog.goblin

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Re: Small apartment buildings
« Reply #6 on: October 17, 2017, 10:28:39 pm »

Interesting. 60 units is a major entry point.

When a property is cash flowing, why do you only make 1-3%? Unexpected expenses?

Many of the smaller units donít cash flow, or do but a short vacancy or moderate repair can wipe out a yearís worth of positive cash flow.  There are exceptions of course, a unit with a long term good renter.  But for every one of those I find two where a tenant leaves with $10K in damage.  The more units you have the more tools you can employ to control that.
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Karma

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Re: Small apartment buildings
« Reply #7 on: October 17, 2017, 10:33:39 pm »

Many of the smaller units donít cash flow, or do but a short vacancy or moderate repair can wipe out a yearís worth of positive cash flow.  There are exceptions of course, a unit with a long term good renter.  But for every one of those I find two where a tenant leaves with $10K in damage.  The more units you have the more tools you can employ to control that.
That makes sense.
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