Commercial Real Estate

Keys to Getting Started in Multifamily Apartment Investing

Expertise: Mortgages & Creative Financing, Commercial Real Estate
17 Articles Written
multifamily apartments

“I want to start investing in apartment complexes. How do I get started?”

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If that is a question you have asked yourself recently, you are not alone. It’s something I hear on a weekly basis from both new and experienced real estate investors. They all want to know the keys to get started in multifamily investing the right way.

If done correctly, investing in multifamily apartments can be one of the most rewarding and best ways to grow your net worth and increase your income. However, one of the most important things you need to do when getting started is avoid making big mistakes that can take you years to recover.

It is important to get started right.

Below are keys to getting starting in multifamily apartment investing.  You can start doing these things today to shorten your learning curve.

Educate Yourself

The most important thing you can do as an investor is educate yourself. Find out all you can about multifamily investments. Learn how they work. Learn how value is determined. At first it’s like learning a new language, but with a little practice it will become second nature. If you are serious about being a successful multifamily investor, it is important to build a strong foundation. That foundation should be built through your investment education.

Evaluate Properties Every Day

After you have educated yourself on the basics of the industry, including how to evaluate properties, you are ready to take the next step. One of the best ways to learn about commercial real estate is by actually evaluating as many properties as possible. Determine what they are worth. Evaluate the areas they are located in and what needs to be done to fix them up. Figure out what you would pay for them to get your desired return. My first year in the business, I personally evaluated over 100 investment opportunities, and what I learned was invaluable to my current investment career.

Start small, build a strong base, and grow

This is where my advice might differ from many of the gurus out there. We’ve all seen the excited investor run out of a seminar and start telling people how they are going to go out and buy a 150+ unit apartment complex without ever owning a single multifamily property. It does happen, yes, but that is definitely the exception to the rule.

Don’t get caught up in the numbers game. Start small, where you are comfortable, and grow as you learn the business. Investing is not a sprint, it’s a marathon. Build a strong foundation stepping up a little in size with each investment and you will grow your business the right way.

Getting a good investment education, evaluating properties every day, and starting small will help you get started in multifamily investing the right way. These steps will cut your learning curve dramatically and help you to avoid making big mistakes. Once you build a strong foundation, you will be on your way to building wealth and massive cash flow.

See you at the top!

Photo: Ben Ostrowsky

Spencer Cullor has spent the last 10 years as a real estate investor and currently owns single family, multifamily apartments, and commercial properties with his investment partners. Currently he ...
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    Jared Gruber
    Replied about 8 years ago
    Hi Spencer, I would be interested to see you write a piece specifically on a) sourcing apartment building deals (because they are typically not easy finds on the MLS) and b) financing apartment complexes (because you typically can’t approach your neighborhood bank to handle this time of commercial financing).
    Spencer Cullor
    Replied about 8 years ago
    Thank you for your comments. I’d be happy to write about both of those topics. I know them well. Look for them in upcoming articles here.
    Andrew Rauch
    Replied almost 8 years ago
    Any suggestions for resources on accelerating the learning curve on multi-unit investments?
    Spencer Cullor
    Replied over 7 years ago
    Andrew, there are many ways you can accelerate the learning curve. A few of the ones I used when getting started was finding a mentor, investing with someone experienced so I could learn while I earned, and reading a lot of books on the subject. I also went through a lot of properties and evaluated as many as possible. Several options are free while others cost. If you really want to get started fast, I’d look for a a good mentor or consultant. They can help you narrow your focus and avoid some big pitfalls that most new investors fall into. Let me know if I can be of any help and best of luck!
    Spencer Cullor
    Replied over 7 years ago
    Andrew, there are many ways you can accelerate the learning curve. A few of the ones I used when getting started was finding a mentor, investing with someone experienced so I could learn while I earned, and reading a lot of books on the subject. I also went through a lot of properties and evaluated as many as possible. Several options are free while others cost. If you really want to get started fast, I’d look for a a good mentor or consultant. They can help you narrow your focus and avoid some big pitfalls that most new investors fall into. Let me know if I can be of any help and best of luck!
    Charlie Epp
    Replied about 7 years ago
    Its nice to see somebody point out the most important part of mufti-family Investing (ie getting an education). I personally contend before you get into apartment buildings you should run your own homes as rentals, to learn the management stuff, in the real world! I also like the part about evaluating 100 properties before investing!
    Spencer Cullor
    Replied about 7 years ago
    Thank you for your comments. I think you are “right on” with them. One of the hardest parts of getting started in anything is finding out all the things you don’t know. By evaluating many, many properties and starting small by learning the operations, you can really cut down on huge mistakes. It might take a little longer to get going, but will pay off in spades by doing it right.
    Kaylea
    Replied almost 7 years ago
    Very helpful information! Do you think it is smarter for someone to purchase their first apartment complex, or build their first complex? I realize many factors play into this, (the market, financing, location, etc) but I was curious what your general opinion on the matter is. Thank you! ~Kaylea
    Spencer Cullor
    Replied almost 7 years ago
    Kaylea, thank you for your comments. In my personal opinion I think it’s much safer to get started with existing complexes. The main reasons being that you have historical operating history to base your purchase price off of and there are so many unknowns when you build from scratch.
    Spencer Cullor
    Replied almost 7 years ago
    Kaylea, thank you for your comments. In my personal opinion I think it’s much safer to get started with existing complexes. The main reasons being that you have historical operating history to base your purchase price off of and there are so many unknowns when you build from scratch.
    ERICA BERNAL
    Replied about 6 years ago
    Hello, Thank you for the great information. How would I be able to go about finding a mentor to help me get started? And how much money would be needed to start small? -Erica
    Spencer
    Replied about 6 years ago
    Erica, I’m glad you liked the article. People can start in multifamily investing at any financial level, although the more you have the easier it is. Most people start small and grow their business over time as their means increase. There are several mentors out there, it just depends on what you’re looking for. We do offer limited mentoring opportunities as we are full-time investors and only have a limited amount of time. If you would like more information on that, please check out our website and contact us. Let me know if we can answer any more of your questions. Spencer
    Larry Ball
    Replied about 6 years ago
    1) Are all the properties typically listed on Loopnet.com? 2) I see “cap rate of 8.0%”. What does that mean? Is that return on investment and before or after management fees? Thanks for your comments.
    Spencer
    Replied about 6 years ago
    Hi Larry, thank you for your questions. You can find properties lots of ways including websites like loopnet, costar, etc. You can also find them through commercial real estate brokers, mailing campaigns, etc. I would definitely recommend talking to brokers in your area once you’re ready to start looking seriously. A Cap Rate is simply how much return on your investment you should expect if you bought a property “all cash” without financing. It’s based on the net operating income of the income producing property. However, there is a lot that goes into it as not all cap rates are equal. We have a free report on our website that goes into detail on how to analyze the financials of an investment property. You should check it out. Let me know if there is anything I can do to help. Spencer
    Michael Angelo Turner Rental Property Investor from Pittsburgh, PA
    Replied 5 months ago
    Michaelangelo turner investor bio the Beginning Born july 5th 1992 in pittsburgh Pennsylvania to a low income family second youngest of 3rd youngest of six. Son of young military man (soldier of the army) father, and mother (recovering now) then psychologically unstable hustler turned drug addict after child services ceased this situation and split us up what followed was court foster homes partial paring home hopping and basement living i began to get distracted at school tiring of moving every few months, hearing we'll see as an answer to almost every request, and never having consistent living arrangement i seen early money mattered so at age 11 i began working at a friends house cleaning dishes and around their home At age 13 i read "nine steps to becoming a realionaire" by farrah gray and began public speaking along side paradise gray and jasiri x as a founding member of 1hood when it was a neighborhood peace organization (didnt make a dime) 15-27 Theatre At age 15 i discovered theatre and cinema via acting and directing I performed for the naacp, competed in various monologue competitions, (all the while working various labor jobs) became a founding member of th artist collective, brecame the youngest founding member of the August Wilson theater ensemble, performed with oscar award winner sir Mark Rylance, and other renowned theater/ film actors such as: Antonio Fargas,Michael Phillip Edwards, and Stephen McKinley Henderson. Also directed and assisted directed alot at this time Studied acting at the conservatory of performing arts in Pittsburgh. At this time i began to lose myself due to vices and back to back pattern of death in close circle being family and friends so i dropped out not long after making the deans list and over staying my welcome got arrested a few times acquired a bit of a background letting my mental break down manifest physically feeling unstable took a break from acting not too long after that i found boxing 25-27-present Boxing (condensed) In jail i met my first boxing coach through his analysis of it as a martial art and a science i fell in love with it hard we both got out i got a year of probation long story short i followed up stayed in the gym daily sparred nationally ranked amatures pros and met and worked with champs like demarcus corely and paul spadafora and got several fights under my belt went to goldengloves fairly fast and am coaching and fighting to this day. Present-future The investor Through boxing i met some one who suggested i read rich dad poor dad, to look into a program that helps funds purchasing houses, and lastly that hed promote my videos After i signed up for the program and read about 3 robert kyosaki books think and grow rich by Napoleon hill and richest man in Babylon it seamed clear realestate was the most practical Though i had over 16 boxing videos on my YouTube I never sent a boxing video I began to obsess over realestate and wealth building in general watching podcasts listening to audiobooks writing notes and constantly revising my plan of action, attending workshops to build knowledge, working to fix my school debt issues and credit score, looking for guidance via consultants and mentors and am now networking as best as possible to build network before this i home hacked a little bit and i started a business in which i rented a commercial space very inexperienced at the moment but very passionate and never been more sure about what i should be doing my goal is to is to learn as much as possible bring value meet people possibly mentors lenders partners contractors realtors lawyers cpas wholesalers etc Very eager and seeking to help out on deals in any way needed, sit in, or shadow for someone active that way its a win win for that person free labor and possible future partner and me to learn the ropes and rules of the road so i can implement them into my systems for my goals in commercial and residential realestate and focus it exclusively on what intrigues me buy and holds-renting out: Storage units Multi family 4plexs and up Apt complexes Please feel free to reachout to me direct message on here to get my info or other plarforms very friendly im a novice honest humble hungry ready to dive in just not supposed to go alone thanks for reading!