I'm trying to get into my first multifamily property. Ideally, between 2 and 10 units. I'm in need of some expertise on how the whole raising money situation typically goes.
A little about me: I've got 2 kids and a W-2 with not a whole lot extra cash to deploy. I don't think I'll be able to swing a down payment myself (even for a duplex). I'm willing to work with capital partners in a JV scenario, but have no idea how to even approach them with a deal. My thought process is once I have a quality deal, I can then start looking for investors to fund the down payment, renovations (if needed) and closing costs. But how do I go about finding these people? Also, what about the earnest money? A lot of agents want proof of funds and an EMD even before submitting an offer. If I don't have a deal under contract, how can I approach an investor with said deal.
i know this isn't what you want to hear, but... you are going to have to save up some cash. borrowing 100% of a project usually isn't possible, and even if it's possible, it's not a good idea.
it's also extremely expensive - the more you borrow, the more interest you have to pay.
i know this isn't what you want to hear, but... you are going to have to save up some cash. borrowing 100% of a project usually isn't possible, and even if it's possible, it's not a good idea.
it's also extremely expensive - the more you borrow, the more interest you have to pay.
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
1y
Agree with Nicholas. You have no experience or track record. You need to save some cash then you can look into tackling a deal. You can also start simple with a single family. Hard money loans can be a good way to get into a deal. Don't put offers in and go for deals till you have cash and have the financing lined up.
Thanks Caleb and Nicholas for the comments! I understand that is the most ideal route, however, I have been trying to simulate what Christian Osgood and Cody Davis (appeared on BP Podcast #799) do. They're model is to reach out to current multifamily owners in your market to build a relationship, and eventually get into a seller financed deal from one of those owners. Once they get offered this deal, they take it to investors to fund the down payment. Seems simple and relatively simple to replicate.
I'm interested to hear your thoughts on something like this since they're platform has been my main go to for the past couple of months.
i have listened to them too, and i have also purchased properties on seller finance. with that said:
-their bigger deals that they take investor money for weren't their very first deals, i believe they had done a couple and had a short track record; and
-you still need your own cash, period. no one is truly borrowing 100%, even when they seller finance. there could be closing costs, holding costs, etc.
also, seller finance deals are very, very tough to find - it can be a part time job just to find one.
Investor · CT · Member since 2022 · 36 posts · 18 votes
1y
Hi Jeremy, I think you consider starting to build your network of potential partners now, rather than after you find the deal. If a great deal lands in your lap and you don’t already have partners lined up, there’s a good chance you’ll miss out while scrambling to find someone who’s interested, understands the deal, and can move.
Begin having conversations with people now such as friends, coworkers, other investors. Share your plan, know your numbers, what kind of deals you're looking for, and the value you’ll bring to the table (e.g., finding the deal, managing it, doing the legwork). Ask about their interest level, capital availability, and timeline. That way, when the right deal comes, you're ready to execute effectively.
As for earnest money and proof of funds - those are real challenges when you're starting without capital. Another reason why pre-established relationships are key. If a partner is ready to work with you, they can help provide the proof and EMD to get the deal under contract.