Buying a first multi-unit first home / investment property

Giggles_Funsworth

Total property buying newbie here.

Any general advice, dos and don'ts, scams to avoid, etc.?

Is there a best way to find things besides plugging shit into the internet?

We've got about $150k to use, and ideally we'd be buying something in the Tampa metro as that's where we're about to move, and if we lived out of it I could save on loans and property management fees. It doesn't seem totally unrealistic to buy a 2-5 unit place out there with that kind of seed money?

Enc

$150k isn't going to get you much in Central Florida. Definitely not a multi-unit property in most areas in Tampa. You might find something in the outskirts, but it won't be pretty.

Median housing price for a single family home across most of the region ranges from $160k-$250k depending on the area and the quality of the property (this assumes livable without massive renovation in a not-terrible area). Multi-unit usually is twice that.

Jasconius

the only places in tampa where you're going to get a livable multi-tenant property for $150k you will probably not want to live

that said, the rental demand in tampa is pretty f'ing high, so good luck to you, but consider widening your zone of interest

Sir Landshark

Do you have $150k in cash or $150k in total purchasing power (i.e. cash + approved loan amount)?

LaOs

When I first read the OP, I had imagined they meant they had $150K for a down payment/startup costs.

Either way, OP, you're going to want to find a reputable Realtor who knows the area and can best guide you with respect to the rental market in the area.

zepherin

General Advice: Don't buy the first property you see, you may want to rent in the area for a 3-6 months so you can really understand the good and bad areas. Avoid termites and foundation problems, do consider fixer uppers that need new kitchens and bathrooms (both of those have best return on investment). Don't let a real estate agent try to bully you into making a sale that day. Spend some time think about it. If the house goes it goes. Establish a budget, lending limits and break even points.

Specific advice:
Use a real estate agent with a brokerage. It's 6% usually the seller pays, but sellers will try to convince you to do it as a private sale.
Do not do this, do not do this, do not do this. If there is a lien, you own the lien, if there is a title dispute you're out a lawyer, or you could lose the property entirely. Real estate brokers have insurance and because they are the middle men, they are the ones that end up eating a dick in a property dispute. I am always suspicious of foreclosures, I've done work to them and done inspections, but I don't know if you can get title insurance, and if the house was improperly foreclosed on, you might be shit out of luck.

Avoid being a lender, I know a guy who didn't write his lending agreement very well sold the land, and they would pay it like a mortgage for a set period and then pay off the rest, the business declared bankruptcy after the first mortgage payment, and he lost millions. Banks are good at protecting themselves you are not.

If you don't have experience doing residential construction work and want to get a fixer upper, get a GC, work you can do yourself is generally limited to Demo, patch, paint and maybe tile. I've had to come in behind real estate amateurs, and give them 30k in bad news, and I usually give really shitty terms, because I think they are going to take a loss and I don't want to share that loss, which is one of the reasons I don't like doing residential projects.

Enc

$150k in seed capital could get you a down-payment plus more on a property in a number of areas. $150k in total purchasing power, notsomuch.

For Florida, pay special attention to the 100 year flood plan. Especially on the west coast, buying close to the shore can be deceptive with storm surge.

Make sure your property has a high wind-rated roof. If it was built before 1992, make sure it was rennovated since to include the proper roof supports for post-Andrew building codes. Lots of properties remained grandfathered and never got updated.

Two story homes are rarely worth the trouble with renters in Florida. AC and water leakage problems are frequent and electric costs for cooling (especially for lofted rooves most townhouse and two story properties like to go with) is extremely expensive in summer to keep livable. It's not uncommon for a townhouse to have 200-500 electric bills to keep the AC in the mid 70s in summer. Cinderblock homes, especially ones floating like most of the "cabana" style homes in the state, exist for a reason. Airflow under the house keeps it cooler in summer and flash flooding is slightly less likely to hit your foundation.

Be conscious of your community's runoff plan. A lot of poorly designed and managed areas, like much of the region around Daytona, have poor sewer systems and runoff plans leading to constant street and yard flooding. Look for large drainage lakes that look mostly empty. That's a good sign you are buying in a place that's properly set for the flash rains we frequently get.

Giggles_Funsworth

It's $150k cash on hand.

Enc

As others have said, no foundation issues and make sure the property has a termite bond that has been regularly renewed for a while. Those suckers can be everywhere down here.

I can't really help you with Tampa area specifics, I'm from the other side of Central Florida, but I do know that much of the city is undergoing a massive comprehensive plan re-evaluation. If you are planning on buying anywhere near the city proper, pull the comp plan from the city website and look at the area's designation code. A lot of Tampa is being shifted from single family and small unit to mixed-use, high density properties and some areas anticipate having eminent domain put to use.

schuss

Live there for a few months to get a feel for the areas and future planning for the city. It's hard to spot good deals/locations if you don't have a solid ground level understanding of the area. What may seem like a good deal actually is prone to flooding or is on the edge of a sketchy area etc.

Cauld

I've been thinking of doing something similar for some time. The reddit community for real estate investing always recommends the better pockets website/forums. There seem to be some good stuff there, albeit mixed in with a ton of advertisements and product placement.

Jasconius

still not exactly clear what your budget it is with 150k COH, but for comparisons sake, check out 408 S Tampania Ave

This was a rental property I lived in about 7 years ago. It has four apartments, and I believe the building itself was valued at something like 600-700k. (there were actually two of them build together with a courtyard, so about 8 units @ 1.3m total). Each unit rented about 1k per month. Excellent neighborhood.

An area you might want to consider is just south of this address, in the direction of McDill AFB. McDill is a MAJOR military installation and as a result there's a lot of transient people looking for places to rent.

I wouldn't go north or west of the airport. North is *mostly* shit, West might as well not even be Tampa.

You want to get in the nougaty center south of Kennedy, or the new hotness which is the intersection of Hillsborough and Florida Ave (Seminole Heights and surrounding areas), which is where all the hipsters are doing their HGTV shit now. It's coming along.

zepherin

Enc wrote: »

$150k in seed capital could get you a down-payment plus more on a property in a number of areas. $150k in total purchasing power, notsomuch.

For Florida, pay special attention to the 100 year flood plan. Especially on the west coast, buying close to the shore can be deceptive with storm surge.

Make sure your property has a high wind-rated roof. If it was built before 1992, make sure it was rennovated since to include the proper roof supports for post-Andrew building codes. Lots of properties remained grandfathered and never got updated.

Two story homes are rarely worth the trouble with renters in Florida. AC and water leakage problems are frequent and electric costs for cooling (especially for lofted rooves most townhouse and two story properties like to go with) is extremely expensive in summer to keep livable. It's not uncommon for a townhouse to have 200-500 electric bills to keep the AC in the mid 70s in summer. Cinderblock homes, especially ones floating like most of the "cabana" style homes in the state, exist for a reason. Airflow under the house keeps it cooler in summer and flash flooding is slightly less likely to hit your foundation.

Be conscious of your community's runoff plan. A lot of poorly designed and managed areas, like much of the region around Daytona, have poor sewer systems and runoff plans leading to constant street and yard flooding. Look for large drainage lakes that look mostly empty. That's a good sign you are buying in a place that's properly set for the flash rains we frequently get.

A good rule of thumb in this regard is don't buy a house at the bottom of a hill. The higher up you are the better drainage and worst water pressure you tend to get. If the house is super cheap, and the reason it is super cheap is because of flash flooding, or poor drainage, it's not necessarily a deal breaker if it is cheap enough, just make sure to install a french drain, and maybe some footer drains if feasible (it may not be depending on the house).

Liquid Hellz

The time and effort it takes to find a decent property like you want is enormous. You will be beat to the punch many many times by all cash buyers who don't care about the condition of the property. It will be difficult to find a realtor who wants to put in enough effort to find you this type of home. You will likely will have to do most of the legwork yourself, which will include scouring the internet for hours a day. Driving to the homes to look at them and the area, talking to neighbors, etc. If you can find a realtor to let you use their MLS login this will help, although they are not supposed to let you. Good luck, give me a call when you are under contract, happy to do the inspection for you. Shoot me a PM if you have any more specific questions once you get into it a bit further.

Aim

Liquid Hellz wrote: »

The time and effort it takes to find a decent property like you want is enormous. You will be beat to the punch many many times by all cash buyers who don't care about the condition of the property. It will be difficult to find a realtor who wants to put in enough effort to find you this type of home. You will likely will have to do most of the legwork yourself, which will include scouring the internet for hours a day. Driving to the homes to look at them and the area, talking to neighbors, etc. If you can find a realtor to let you use their MLS login this will help, although they are not supposed to let you. Good luck, give me a call when you are under contract, happy to do the inspection for you. Shoot me a PM if you have any more specific questions once you get into it a bit further.

Any advice on setting up a fair rent without contributing to the housing hellscape we're living in?

Quid

Charge a reasonable price? We could rent our place for 30-50% over our mortgage but I know I probably won't be able to bring myself to charge that if we do rent. Especially when they're essentially paying me to pay my mortgage.