Case Study: How I Bought My First Apartment Building [With Pictures!]

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After years of acquiring and investing in single family rental homes, I recently purchased my first apartment building. Here is the breakdown of my first apartment building purchase to provide some valuable insight if you decide to make the leap into multifamily investing.


My partner and I wanted to expand and grow our portfolio. We decided to branch out into multifamily. Our criteria was 40-unit buildings and above because, in our eyes, it takes the same amount of work to acquire one large apartment building as multiple duplexes or triplexes, etc. Plus, with the right infrastructure, it’s easier to manage one building, in a single location, versus units spread out in different areas.


There’s this pocket near the south side of downtown that has been pretty run down for quite a while. Everything around the location is prime. I’ve driven it over the past couple of years and kept my eyes on the two apartment buildings right across the street from each other.

At the time, one of the buildings had been vacant for quite a while. The other was a pretty run down “mom and pop”-owned building. Prior to this deal, we established local relationships with brokers and contacted sellers directly to find off-market deals. I happened to notice more recent renovations on the vacant building. Then I drove by the other one and noticed it was in distressed condition, as mentioned.

I went to my laptop to research and noticed it was previously listed at $1.4M on LoopNet, but got taken down. I contacted the seller directly by tracing his information from the public records, which I found through a simple Google search. He had recently sold a couple of his other properties and was looking to transition from being an active landlord to a full-time debt collector. That’s a good sign of a motivated seller! We spoke briefly, during which he stated that a previous deal fell through and recommended we speak with his sister, who was brokering it. He was also adamant that “if you’re not willing to put $50k down for earnest money, don’t bother with proceeding with the deal.”


After speaking with the broker, I asked for the rent roll and T-12. The T-12 breaks down the actual income and expenses of the building over the last 12 months.

We determined that in order to make this deal work, we needed to be near $1M for the purchase. Based upon the T-12, our cap rate was 7% at the current 50% occupancy rate, but when repositioned, we’d be closer to 10-11% cap rate.


After determining what we would pay, we shot the price over to broker. We started low. I believe it was just $600k. The seller countered at a much higher figure. During this time, my partner and I reached out to a few investors—including Gino Barbaro and Matt Faircloth, as well as other local people in the multifamily space—to get extra sets of eyes on the deal. With our infrastructure, the numbers would work at a significantly higher price. Our mistake was underwriting the deal too conservatively. We came up on our offer to $900k and went under contract. The seller was interested in carrying back a portion of the purchase price, which was good for us. We only needed to put down $200k.


During our inspection, we had the inspector walk ALL of the units, which was good but unnecessary in my opinion. That was our second mistake. It is a must for the investor to walk all the units, but not necessarily the inspector. The report was 80+ pages and repetitive when it came to detailing each unit. It was good to learn this lesson, though. In conclusion, the report showed the building needed work, but nothing too alarming. The biggest thing was configuring out the decks and balconies so they would sustain themselves and guiding water from the property.


Nobody wants to labeled as a “re-trader,” but in our scenario, once we ran the numbers, we were cash flow negative. The first couple of months were at the current interest rate to seller, and our term of one year was too short. Jake and Gino recommended we get that extended. They also threw out the idea of interest only. We posed the terms to the seller and ended up settling on 3% the first year, 5% the second, and 7% third year with a 3-year balloon payment on a 25-year amortization.

Work Needed

We wanted to give the place an entirely different look and feel. We started off by changing the signage and name after acquiring the property. We plan to address the exterior of the property  first, along with upgrading and renovating other aspects of the property. Everything else we have quoted in the scope of work here. Our in-house GC helped with that.


We decided to outsource our laundry to Coinmach with a 90% us/10% them, split after they get the first $14 per machine. The laundry brings in approximately $400 per month. We’re not looking to make too much money on this. It’s essentially something nice we want to provide for our tenants. We’re still considering some type of cable provider as well.

In Conclusion

Despite starting the deal in October and not closing until April, it was a great experience. It’s always exciting to dig up great deals—and it’s even better when they close. We learned a lot, including how to save on inspections, the best ways to structure seller financing deals, and the great value to be found in working with others on BiggerPockets.

Have you tackled your first multifamily deal yet? Any questions about this property?

Let me know with a comment!

About Author

Sterling White

With just under a decade of experience in the real estate industry, Sterling currently manages over $10MM in capital, which is deployed across a $26MM real estate portfolio made up of multifamily apartments and single-family homes. Through the company he co-founded, Holdfolio, he owns just under 400 units. Sterling was featured on the BiggerPockets Podcast and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single-family investing and apartment investing to wholesaling and scaling a business.


    • Sterling White

      One option is finding blog contributors on here who write on their personal experiences in acquiring, renovating etc multi-family properties then click through their profile and message them..Yes, you can find investors on here to fund your deals..Hope that helps.

  1. Great read and congratulations, Sterling!


    Looking for owner financed properties 5-10% down.
    Not so pretty houses too for rehab projects.
    Areas: Dallas Areas (North)

  2. Jeff Bridges

    Thanks for the nice article on how you improved the cap-rate on an apartment complex and found a value play! I liked the before/after photos too! Since I’ve done business with coinmach on behalf of my condo association, your mention of 90/10 split seems to have omitted ownership of the machines, which plays heavily on what you can negotiate for the management and readers might be confused on what they can get on an identical contract. Is my assumption correct that you already owned the machines and coinmach took over break/fix and coin collection services? I see more commonly a 50/50 or 60/40 split with 60 going to the property owner when the machines are provided/leased by coinmach and include repairs plus coin collection. We get a smaller cut, but we didnt have to front any money for the machines and all of our utility costs are covered so its mostly cashflow neutral contract for us in a smaller building setting. Also I’ve found its a highly negotiable contract depending on region/ laundry company so mileage may vary…

  3. Dante Pirouz

    This is a great case study!! I am in the process of negotiating 20 units with seller financing which will put me at my “freedom number” of 30 units! Because we’ve only purchased duplexes and triplexes up until now your article is a great step by step of what we will be going through over the next few months during the due diligence and value add process! Thanks for all the tips!!

  4. Howard Sklar on

    Congrats on your acquisition. My very first R.E. investment was a 17 unit apartment building! I never looked back and now I own and operate 6!. When people ask me which direction is best, here is my standard reply:

    Question: Which would you rather own 10 SFH’s or a 10 unit apartment building.

    10 furnaces vs. 1 boiler
    10 roofs vs. 1 roof

    enough said….

  5. Anthony Jackson on

    @Sterling I’m very inspired by your story because apartments are what I’m educating myself on. My question is total what was your out of pocket cost between the down payment and the renovations? Did you and your partner front the renovation or down payment or both?

  6. Gianni Laverde

    Congratulations Sterling on this huge step you have taken to your first MF deal. This deal demonstrate the power of creative financing and also the immense value of BPs network.
    How many units does the building have? Would you mind sharing you numbers?

    Thank you

  7. Shane Newell

    Congrats, Sterling. just what I needed to read as I have been investing in flips, single families and small multi’s for ~10 years now and looking to make leap to larger apartment buildings. Best of luck in this venture!

  8. Marvin White

    Hi Sterling, would you prefer starting with no tenants or keeping some to have cashflow. Also did you use a bank to refi? I have a four plex but looking to 10X this year. I’d love to see the numbers on your deal. Thanks for your time.

  9. dennis zwirchitz

    @Sterling White, Thank you for sharing. Congrats! Would also share your numbers with me? I am interested in growing my understanding of this space. Many speak to trading up from their sfr and 2-4 unit multi-family. From your perspective what is the trade up? You mentioned 40 plus units all at one location on one side of town. Other gains?

  10. Sterling, this is a very inspiring story and simple to the point that lay people like myself can understand and gain interest in. I am at that point of just 1x SFR but with a full time job making $100k. I will surely get to that point of a similar purchase of an apartment in the next 10yrs when I retire so I hope you will still be around for me to pick your brain!

  11. Ted Morrett

    Nice job Sterling.
    Love to hear the win win situations and sounds like this was a good one.
    Hey if you are willing I would also like to see your numbers to educate myself.

    Thanks again and great job

  12. Rashad Nelson

    Hi Sterling,

    Wow, what a deal! Based on your numbers, I count (46) units that you picked up for less than $20K per door initially, then after renovations, the cost was just under $30K per door. Amazing, that’s a home run my friend. Congratulations.

    Quick question – how long did all the renovations take to get completed?

    There’s a few deals in my neck of the woods where the properties are extremely dilapidated and I have a local mentor that’s doing a few right now, but she’s running into a lot of issues with the local government. Most advise to stay away from these and get something that’s cash flowing. What’s your take? Congrats again man!

  13. Sterling White

    1. The renovations will take between 12-18 due to previous tenants at property. We have to wait to their lease ends in order to renovate those units.
    2. I personally invest in something that is already producing cash flow. Those large projects with no paying tenants is too risky for me. If you’re experienced in developing those types of assets and the numbers work then proceed. Seems risky though. Hope that helps.

  14. Reuben H.

    Sterling, I’m looking to buy a 8-12 unit building that’s already cash flow positive and not in need of renovations. I have my eye on a few and and missed out on one last week that was on market less than 24 hours.

    Question: how much time does this project consume?

    I’m usually out of the country and don’t want to be flying in once a month to hold hands or waking up at 3 am to make phone calls during local business hours.

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