December 6, 2023

From Single Family to Multi-Family: How RB Built a Profitable Real Estate Portfolio and Found Success in Mid-Term Rentals

RB is a realtor, investor, and property manager in New York. She pursued her first multi-family real estate investment at 23 years old but had a hard time locking one in, so she got creative and purchased a single family home instead and converted it into a multi-family property. She has a variety of multi-family properties in Queens, Long Island, Upstate New York, and the Bronx. RB has a heart for the inner-city communities of New York and loves coaching others, showing them that real estate is possible for everyone.

RB has been a seasoned landlord since 2003, with a track record of successful long-term rentals. However, just before the pandemic hit, she received a valuable tip from a realtor friend: consider renting her properties to traveling medical professionals. Intrigued, she decided to explore this option further and was pleasantly surprised by the results.

According to her realtor friend, medical professionals are in constant demand and tend to work long hours, leaving them little time or energy for maintaining a home. As a result, they look for a comfortable, peaceful, and quiet place to stay, which makes them ideal tenants from a landlord's perspective. Her friend noted that the demand for such rentals was high, and the gap between tenants was minimal. Moreover, she would be able to command much higher rents than before, making this a profitable and lucrative option for her.

Having just heard about this blossoming niche in the real estate market known as mid-term rentals, RB was excited to jump in. She quickly converted one of her long-term units into a mid-term unit, listed her property on FurnishedFinder.com, and has been pleased with the results ever since.

Before RB ventured out into mid-term rentals, however, she got her feet wet by purchasing single family homes and converting them into multi-family properties. While that may sound simple enough, RB was figuring out how to do all of this on the fly—learning on the job, so to speak. She knew it was possible because the single-family home she purchased had the exact same layout as the multifamily home she had originally been interested in purchasing. She sought the help of professionals, such as architects, electricians, and plumbers, consulted with her local building department to make sure she was getting the proper permits, and started making progress.

Once her property's conversion was complete and occupied by tenants, she realized the huge advantages of what she had done: she immediately had huge equity in her property since she was now collecting rent from two families but still only had a mortgage payment for a single family home. The equity she was able to pull out of her initial property was used to rinse and repeat this process of obtaining single family homes and converting them into multifamily properties.

The advantages of this conversion were immediately apparent to RB. She was now collecting rent from two families but only had a mortgage payment for a single-family home, thus building significant equity in the property. This equity allowed her to invest in more single-family homes, convert them into multi-family properties, and repeat the process. Soon, RB had built a portfolio of profitable multi-family properties that generated a stable stream of passive income.

Pre Pandemic, RB was deeply immersed in community engagement, helping others understand how real estate can help build generational wealth. Her focus was on the importance of home ownership, the benefits that come with it, and how to create a business. She also tries to educate people about the resources available to them, from how to obtain grants, down payment assistance, closing cost assistance, and how people can get their credit score repaired for free.

When she's working with a client that has a budget on the smaller side, she advises them to focus on the locations that fit their budget. The number of multifamily homes to choose from drastically increases when one broadens the locations they're willing to invest in. She also makes sure her clients understand how to squeeze every last bit of profit from their property, often in ways they may not have thought of. For example, in New York, space is at a premium. Garage space and driveway space are all rentable.

While RB acknowledges that many people are able to profit from real estate arbitrage, her goal for her clients is to purchase property and leverage that investment in order to purchase additional properties.

The Importance of Having Systems in Place

RB describes her personal real estate learning experience as learning to fly a plane. Having discovered firsthand what works and what doesn't, she now wholeheartedly emphasizes the importance of documentation.

Communication is key to a successful relationship between landlord and tenant. Setting a level of expectation between the two is critical. The tenant gets a clear understanding of the property and what they're responsible for, and the landlord learns what is important to the tenant. RB has never had to evict anyone since she started her real estate journey in 2003, and keeping that open line of communication is important.

A perfect example of great communication is anytime you have a conversation with a tenant regarding any issues you may be having, whether it be noise, damage, or something else from your lease that may need to be enforced, mention to them that you know life is hectic and busy so you'll send them a written copy of the conversation for their convenience so there's no confusion. Doing this makes you seem like a reasonable, responsible landlord to the tenant, but you're also documenting any instances that may need to be referenced later when their lease ends, such as reasons why they're not receiving their full deposit back.

Help on Speed Dial

As a landlord, it's important to have a reliable network of electricians, plumbers, contractors, and handymen available to help with any issues that may arise. If an issue is not addressed right away, tenants often feel like you're dragging your feet, which starts to taint their experience at your property. Rental properties require ongoing maintenance and repairs, and having a team of professionals you can rely on can save you time, money, and stress in the long run.

Electrical and plumbing issues can be particularly urgent as they can pose safety risks and cause damage to the property. Having an electrician or plumber you trust on speed dial can help you address these issues quickly and effectively. Similarly, having a contractor available for larger-scale repairs or renovations can help keep your properties in top condition and attract quality tenants.

A reliable team of handymen can also be invaluable for handling smaller maintenance tasks, like painting or patching walls. By having a network of professionals you can call on, you can avoid the hassle of trying to find a qualified technician in a pinch and ensure that your properties are well-maintained and in good condition.

Property Management Software

Landlords have a lot to do, including managing tenants, responding to maintenance requests, and monitoring rental revenue and expenses. It can be difficult to keep up with everything, especially if the landlord has several properties. Software for property management, such as Guesty or Lodgify, can be useful in this situation. The use of these platforms simplifies procedures and benefits landlords.

Landlords can automate a lot of their activities with property management software, which is one of its key advantages. For instance, programs such as Furnished Finder’s sister company, KeyCheck, accept online rent payments and sends automated rent reminders. Besides saving time, this streamlines the leasing process for both landlords and tenants.

Landlords can automate a lot of their activities with property management software, which is one of its key advantages. For instance, programs such as Furnished Finder’s sister company, KeyCheck, accept online rent payments and sends automated rent reminders. Besides saving time, this streamlines the leasing process for both landlords and tenants.

Another advantage of using property management software is that it provides landlords with a central hub for managing all of their properties. They can use the software to keep track of rental income and expenses, manage maintenance requests, and communicate with tenants. This allows landlords to stay organized and ensure that nothing falls through the cracks. It also makes it easier for them to scale their business as they acquire more properties.

Recession Advice

As we may be heading into a recession, RB suggests investors build their cash reserves to be able to take advantage of property purchases. Someone may find themselves in a bind and need to make a quick sale of their property. If you're in a position to buy, you not only help them out but are likely to pick up a property at a price below market value.

Advice for her younger self

Never get comfortable. It's important to note that in the real estate investing industry, change is constant. Whether it's shifts in the market, changes in tenant needs and demands, or new technologies emerging, it's essential to stay adaptable and willing to pivot in order to remain successful.

Staying on top of industry trends and constantly educating oneself is part of this. Attending conferences, networking with other investors, or reading books and articles by industry experts could all be part of this. It may also imply looking for new ways to improve tenant experiences, such as incorporating smart home technology or providing more personalized services.

In addition, it's important to remember that real estate investing is not just about making money but also about creating positive impact in communities. By focusing on providing safe and comfortable living spaces for tenants, being responsive to their needs, and supporting local businesses and organizations, investors can create a sense of community and foster long-term relationships with tenants.

Overall, the key takeaway for any real estate investor is to keep an open mind, stay informed, and always be on the lookout for ways to improve and add value to tenants and the community. By doing so, investors can not only weather the market's ups and downs but also thrive in the long run.

Listen to the Podcast here

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Author : FF Team