TAMPA, FL, September 17th, 2017 | GREEN Interviews: Ramp up Your Real Estate Investment Strategy and Add Properties to Your Portfolio the Right Way
Kurt Westfield founded WC Equity Group, a real estate services firm in Tampa, Florida in 2008, and has developed it into a full-service brokerage, property management, syndicated fund, and real estate investment platform. He also owns and operates additional apartment holdings in the Tampa market and his management division manages both single-family and multifamily assets state-wide. We talked with him recently by phone about how to move from a single investment to multiple ones. Following are his edited comments.
Question: When does someone know they’re ready for a second residential property investment if they’ve done well with the first one?
Answer: This typically comes down to available capital. It’s important to be cautious about over-leveraging. But, if the capital is available and the risk is moderate, the second, third and fourth investment properties tend to come quite quickly once the first functions and offers good cash-flow. A lot of this depends on the team(s) in place for absentee investors. In our case, we’ve inherited several nightmare experiences that owners have had and which required repair.
Question: Is it best that the next investment is similar to the first, perhaps, a two- or three-flat or just a single-family home?
Answer: Finding a niche to invest in has always had its benefit, and we find many investors that stick to that profile (whether single-family homes or multifamily under five units, or condos, etc).
Question: How much do you find you need to put down in making this kind of investment? Have you had better luck with getting a mortgage from certain kinds of lenders?
Answer: The golden standard is still 25 to 30 percent down for most lenders; especially the institutional/conventional variety. Cash still remains king, and we find many clients aren’t mortgaging properties but paying cash and avoiding debt altogether. I second this format, as well.
Question: What about a bigger multifamily dwelling—what are signs you’re ready for this investment?
Answer: Taking on a larger multifamily property almost always requires a suitable team to help you perform: property manager, subcontractor(s), lender, project manager, etc. Those investors who are entirely in-touch with the real estate sphere and live local to their investment may be able to handle the day-to-day management individually to cut out some management costs for a higher net income. However, at a certain point, critical mass is realized and it becomes detrimental to operate an apartment building in this manner.
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Full interview available at Global Real Estate Education Network.