Looking for my first apartment building.. Where should I start?

9 Replies

Hello all!

Recently I flipped a couple of homes and have roughly 150k that I plan to use for a downpayment for an apartment building around St. Paul, Minnesota (Where I live). 

A few questions that I have are:

1) Any books/articles you would recommend?

2) I'm having a hard time finding apartments for sale in St. Paul that fit my price point, should I look out-of-state?

3) Any recommendations for someone in their early twenties for investing in real estate?

All replies are greatly appreciated! 

@Gabe Eisenhuth Nice job on the flips. I don't have a good book for you but I can recommend using a Commercial Real Estate Broker to help. As far as who, that's up to you but Id look for the best. As someone who is also in their twenties, keep showing those old guys up. Us young guys can hold our own too! What's your price range? 

@Nick Rutkowski  Thanks for the response! Currently looking for properties that fall around 600k-800k, also could push a little over a million but would need to find some more capital. Mainly looking to find at least a 6-12 unit building, but anything that cash flows well and could use a few repairs to increase rents would be ideal. 

@Gabe Eisenhuth - Congrats man! glad you got the flipping part handled pretty well! I just saw 3 duplexes pop on the market for $279 each they're all right next to each other and would cash flow well (3/2). I know it's not an apartment building but might be a good start it's near 3M. If you buy all three I could see you doing it as a commercial loan with 6 total units. I also know a broker who is younger and focuses solely on commercial buildings if you're interested just message me. If you find a building you like but it's "not for sale" he has said he's willing to find owner info and contact them on  your behalf to try an negotiate a deal if it makes sense so it doesn't limit you to what's on the market.

@Gabe Eisenhuth It's typical that apartments are purchased as a partnership or syndication.  There are a lot of great resources on the subject.  I know of at least 3 reasent meetups on the subject.  MNRIA has an apartment investors subgroup.  A great book on the subject of syndiation which is a way larger apartments are purchase is The Best Ever book on syndiation (link to pdf version https://zlibraryextra.com/product/best-ever-apartment-syndication-book-ebook-pdf-version/?gclid=Cj0KCQjw-tXlBRDWARIsAGYQAme16bFgqoyk8qkGOiha4OQWpAnZ02J8Z_2E45MmA2MMkFFOnhiMJF8aAoOdEALw_wcB)

I'm working on buying one now in Lousiville, reach out if you would like to get coffee and talk more on the subject.

@Gabe Eisenhuth

1) Best Ever Apartment Syndication Book - Even if you never syndicate you can learn a TON about apartment investing in general.

4) Be patient, we have the advantage of time on our side, patience and consistency are key to success. That's my takeaway from studying/working with highly successful people.

Congrats on your flips @Gabe Eisenhuth !

Apartment buildings are a great way to go for sure, if you do proper DD along the way.

We sell 2-3 buildings of all sizes to our clients every month.

And 90% of our clients are out of state, indeed.

It's 100% ALL about the team on the ground as to whether you should buy out of state or not.  If you get this part of the equation wrong, you will regret it and hate your life.  Quality property management and the managing team will make or break any investment, but even more so out of state/remote investments.

We just sold a 24 unit 2 weeks ago, have a 10 unit coming in 2 weeks that's available on seller finance, sold a high-end duplex yesterday, and we're selling 2 four unit buildings next week.  

Find an operator that has great management and great buildings in the target areas you want at the right price with the right returns and then.....do even more DD still.

Also, set your realistic expectations ahead of time. We often have clients asking for A/B Class buildings, but also wanting 11-12 CAP rates. CUTE....but doesn't exist. If it did, other investors would have jumped on it 100X over and driven the price up. A quality A/B Class building will yield a 6-9 CAP depending on class, and you won't see double digits until you hit C or lower.

I've seen way too many folks class a building as C+ when we'd call it D at best, so be wary of that as well! 

Best of luck in your hunt.  

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