Input sought - investor demand for high cash-flow portfolios of smaller Maritime income properties?

[TangoWhiskey]

My partner has been doing really well purchasing smaller 2-5 unit buildings in small maritime secondary markets and doing the renovate - retenant - refinance cycle placing all utilities on the tenant. Typically he gets all the cash back in 4-6 months including downpayment and the buildings cashflow on average close to 200 $/unit/month. For example his last 4 plex nets 768 $/month after all expenses including mortgage and paying himself a 10 % mgmt fee.



We are considering developing portfolios of such properties for passive investors in other provinces where cash flow is much weaker and property returns are more dependant on appreciation and amortization. Would there be a big demand for portfolios of say 20-30 units spread out across 6-8 buildings if the portfolio came with a trained manager? These would be in smaller markets (4K-15K populations) but surprisingly recession proof as the other housing options for tenants in these communities are typically very poor and he never has vacancies. The anticipated total price tags would be around 45-50K door with a 10-12 % cash on cash (and maybe even higher), probable ROI of 14 - 18% coming mostly as cash flow each month. These would be cashflow plays purely as long-term appreciation is not there.



I can't help but think there must be a big market for this if we can prove excellent management is in place and the tenant base is stable.



Thanks,



Tris

 

[Thomas Beyer]

Only if you provide management support and do a JV. Most investors would prefer ONE building with 24 units that 8 3-plexes.



I can see a JV opportunity here, as I would not want to do 8 mortgages, 8 utility bills, 8 mortgage statements, .. a nightmare.



As a JV: yes. As an exit option for you: no.