Rehab and Refinance

Rental properties in my local area are typically 50-100 years in age and if you are lucky have been renovated in the last 30-20 years. Most are dated, inconvenient and more than likely, not too clean. With properties in this condition it is hard to attract young, smart professional workers to your city. Thus leading to a declining city population and a downward trend. What is the solution? I think the best option is to buy multi unit rentals, rehab a group of them at scale and refinance with a local bank in order to pull out funds(equity) to put down toward the next group of properties.

Buy Right

The biggest obstacle to this solution is to purchase income producing properties at a low enough price to justify the capital expenditure. The best way to frame the conversation with the current owner(seller) is to sell them on the idea of getting rid of the headache. It's hard for most sellers to give up a couple grand of cash flow each month, but if they can get a decent chuck of change and never have to deal with fixing it they might bit.

Rehab

Contractors are not in short supply, but good ones are. Partnering with the right contractor can make all the difference. My partners and I have failed at this before but look to have a learned from our early mistakes and are making strides. The is the second domino needed to make this solution viable. A bad contractor can easily sink a project of this size and put a property in even worse shape. Vetting potential contractors and utilizing a great attorney for the contract up front is a must.

Refi

Banking relations may be the easiest part of the process. Having a banker and a local bank that see the vision and the opportunity is huge. This can be a win-win relationship if frames right. Offering a small bank constant capital deployment options backed by cash flowing assets is an easy sell.