The reason I'm asking this is my small town actually has a property on loopnet that I know exactly where it's at(maybe 6 minutes from where I live) for $1.9m with 51 units and a 9% cap rate. I haven't ran the numbers but if I can find the lender I think this would be a great start since single family is extremely hit or miss in my market. This complex is actually somewhat nice compared to the rest in town.
My first ever deal, other than my personal residence, was a 20 unit syndicated deal. How will you fund it? Do you have a plan? Have you done the underwriting? Do the numbers work?
@Jeff Greenberg That's awesome to hear! I figured it was possible to do just not sure how possible. I sadly haven't ran numbers or done underwriting yet, I planned on talking to the owner since they live in my city(I figured I'd have to invest at least 30-40 minutes north) but I used to deliver pizzas there all the time and it always seemed pretty occupied. It doesn't list the rents so I'll definitely need to talk to the owner about it to help running the numbers. As for funding I possibly have a partner who specializes in MF and Syndications so I sent it his way and have been waiting for a reply. Thanks for the reply!
@Brady Carpenter Now what you just told me, tells me that you are not ready to do a deal. You are emotionally involved with a property, but don't even have numbers. What did you send to this potential partner? You don't even have any numbers yet. There are 1000's of properties near me that I would like to but, but the numbers won't work for me.
First rule to investing is don't get emotionally involved with the deal. Love the numbers not the property. From what you are telling me, you have nothing. You have no idea what he expects to get for the property, nor do you know the rents. You said nothing about the comparable rents in the area, and you have only answered one question that I previously asked.
When I got that deal that I mentioned, I had been searching for three years, and getting educated while I was searching.
Get educated. You have no clue what you do not know, and it is a lot. I hate to pop your bubble, you are not ready yet.
@Jeff Greenberg I've listened to about 150 of the BP podcasts so far, 4 Hour Work Week, and a couple Brandon Turner books. I may not be ready but I know I'm close, I need to sign up for a pro account and use the calculator and I feel like I might be alright by that point. Thanks for the advice!
@Brady Carpenter Yes, I agree. run the numbers and make sure they work. If they don't work, walk away. If you're starting out, this may be alot more than you can chew if you go solo. If you have an experienced partner that sees this as a good deal, partner up with him/her and learn as much as you can.
If you research 40 properties to buy, make offers on 10 of them and close on 1, then that's a good average. If you make 10 offers and get 5 of them accepted, then you are offering too much. Something to keep in mind.
On another note, my commercial brokers told me the loopnet is a bad place to find deals. All the good deals are done off-line and off market. The "scraps" as he puts it, that don't sell are on loopnet. Not sure if this is a California thing, but just passing on the message.
@Brady Carpenter you need to buy Dave Lindahls book, Multifamily Millions. It will help you a lot with your underwriting and general knowledge.
@Paul Choi Thank you so much for the advice! I'll definitely take all of that into account for my first deal.
@Joseph Bramante Will do, I appreciate the recommendation!
@Brady Carpenter , another thing to consider is how you're going to manage the property if/when you acquire it. Sounds like you've tried to educate yourself, but prior experience with a smaller property might be prudent and enable you to develop the systems you'll need for a larger property. I don't want to discourage you, just something to think about. There are certainly examples of people who dove in head first to larger properties and just made it work. Good luck, I'm rooting for you!
@Chris Jensen Thank you, Chris! I appreciate the advice. I figured I probably should start small with the lack of experience but I too have seen people succeed with larger. I guess it's up to my risk tolerance at this point. Haha