DO YOU HAVE TO START small?

Question

Hello, all I would love to get some input maybe some book suggestions or just some more experienced advice....

I am a acquisitions manager for a  wholesaler here in Oklahoma I have yet to buy any  SFH and I am wanting to  buy something soon, but I have been reading ABC'S of real estate investing and it has really got me thinking about maybe going into multifamily, it seems like you can increase cash flow more than just one, and I like the idea of that.... I would house hack, but since I have 2 kids and one on the way I don't think that will work lol

So has anyone started with just commercial properties, and if I am understanding properly the financing of the loan is based on cash flow not the credit of the person applying... Which is good, because my credit is not so good.

@anson

Thanks in advance to all.

@Anson Young  do you know anyone who started with Multifamily's

Mark W Carpenter · Answer

Thank You all so much, I am just excited to wet my beak so to speak... I look at so many deals with my day Job, and I am ready to turn my burning desire into a reality....

Oren K. · Answer

Mark,

Size is all relative. Some people start with 1 SFH and grow 'organically'. Others start with small MFH (e.g. 10 units), others jump right into 100+ unit complexes (not recommended for the faint of heart). Yet others just stay passive going with syndicated deals. It depends on many factors;

- Available capital

- Access to financing

- Prior non-real estate experience (e.g. project manager)

- Team (e.g. PM) network

- Risk tolerance

and so on.

And there are those that avoid residential like a bad cold and stay strictly office / retail.

It can all work and it can all go horribly wrong. I believe that some overriding indicators for success is attention to detail, ability / willingness to learn and listening to the experience of others. But then these are success factors for any venture.

Oren

Andrew Johnson · Answer

@Mark W Carpenter I think the first step would be talking to lenders.  I don't know about other experiences but when I got loans for my commercial multifamily properties the lender cared about everything.  Sure you want the property to perform but I also filled out a PFS (personal financial statement) and had to supply all of the supporting documentation.  While I'm sure some regional banks, credit unions, etc. will slightly differ in their weights I would imagine they all care about credit scores, net worth, DSCR, etc.

Anson Young · Answer

I know a few who started with 4 plexes, know of a few others that jumped right into 8-10 units as well.  You dont have to start with just SFR or anything, just depends on your situation and what you can structure.

Daniel F. Harb · Answer

Great post, @Mark W Carpenter, thank you!

@Andrew Johnson, would you recommend having a personal financial statement along with my prequal letter? Does it carry greater weight? Thank you in advance!

Much profit to all of you!

DO YOU HAVE TO START small?

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