inherited rentals - Posted by J. Crown

import · November 20, 2005, 9:59am

Posted by J. Crown on November 21, 2005 at 12:13:42:

Thanks for the advice everyone. I managed these properties a few years ago, then left to try my hand in other investments. I suppose where i’m indecisive is that the avg casflow per month for the properties is $535, and i cant decide if i should owner finance the homes out, so that my family still has that monthly income, or pull cash out and build a multi unit portfolio. i say that because i owned 104 unit at one point and i enjoy that type of investment better, but for this portfolio, which i really agreed to take over as a way of incorporating my family into the business, i’d like to build slowly with anything between 2-20 units. since i took over i’ve gotten rents back to market and the houses cashflow well, but just arent worth a ton(the highest would be about $100,000) if sold outright. i know a gentleman who does own some apt buildings, but his bread and butter has been building duplexes in a rather unique way and rakes in about 3.5 million a month all told. so i might try a variation of that. thanks again for all the help.

import · November 20, 2005, 9:59am

Posted by J. Crown on November 20, 2005 at 10:59:28:

I recently inherited 6 sfh and 1 duplex, all have been free and clear for years. my question is, what’s the best way to parlay these properties into even more? just a straight refi? i’m looking strictly at buy and hold multi-units for this portfolio. any suggestions are appreciated.

import · November 21, 2005, 6:38am

Take Some Time - Posted by Jimmy

Posted by Jimmy on November 21, 2005 at 07:38:07:

What I did not get from your facts was how long, if ever, you have acted as an investment property owner/manager. If not at all, don’t dive into this right away. Manage this small portfolio for half a year and get the feel of it. There are tons of things to to know, and you will make plenty of mistakes. With no debt, you can easily absorb plenty of mistakes.

Once you get to the point of knowing htis biz is for you (and you may already be there), pull cash out of your 7 properties and start buying more.

But this raises some questions: How to Finance? What to Buy? Where to Buy?

How To Finance. You could do individual loans for each property, and get very attractive interest rtaes and 30 year amortizations. You could also do one cross-collateralized loan and simplify your life. Investigate both.

What To Buy? I have been immersed in REI for 5 years now, and my core business has shifted several times. I’ve bought “finished” properties. I’ve build new duplexes. I’ve bought raw land and resold it. I hate all of these. What I really like is finding neglected properties, turning my crew loose, and holding the finished product for rental income. In my market, I can generate the maximum rent for the smallest investment. Once a year, usually in October-December, I will sell a property or two, in order to generate a targeted amount of capital gain. My lender likes this.

Look around at different things. Don’t throw all of your money at one idea. Leave yourself some options. Holding onto a pile of cash preserves your options.

The one thing that ig absolutely, positively, guaranteed to stay the same in this biz is this: EVERYTHING CHANGES, INCLUDING YOU.

good luck.

import · November 20, 2005, 2:56pm

Re: inherited rentals - Posted by ken

Posted by ken on November 20, 2005 at 15:56:51:

I would suggest you spend 1 year and learn how to manage them properly.The coming winter is a lot harder to deal with than most beginners realize.

import · November 20, 2005, 12:14pm

Re: inherited rentals - Posted by Frank Chin

Posted by Frank Chin on November 20, 2005 at 13:14:44:

J. Crown:

Since you inherited the properties, you might want to check first with an estate attorney on estate taxes due, if any. There’s no capital gains due if you sell them right away.

Which means if you’re itching to do apartment buildings, you can just sell it, park the cash, and take the time to look.

I don’t know your local market, it could be at its peak, so you might want to part your money and wait a while also.

Besides, many people spend a whole lifetime to get to a “free and clear” state, as you didn’t meantion the cash flow, you might just want to live on it, and do creative RE where you don’t need to invest cash.

Another thing to do if you cash out is Hard Money lending, notes, etc. The possibilities are endless.

Frank Chin