How to finance an apartment complex?

Real Estate Investor · Member since 2011 · 35 posts · 3 votes

I'm looking at apartment buildings for sale by owner, generally class C or D, to fix and resell or hold. My problem is I have $50 and know little about creative financing.

Please offer any solutions you know of.

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Rob Gillespie

Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes

15y

Hi Chenelle,
You can absolutely pull it off. You need to stick with the smaller buildings. I have a prospect to call tomorrow that has a 4 unit building with only one unit rented. the payment is around 1700 per month. I can get it no money down, but the cash flow is not gonna really be there. It will only bring in 2400 per month on a perfect day before vacancy an repairs. You will get your best deal working with a cash partner and stealing good deals.
An example I saw of that a couple of weeks ago, my buddy bought a 29 suite for 25k! Sure it needs a little love, but it was a steal!!!
There are a lot of "tired" landlords of mid size buildings that will let you take them over.
Just remember, bad deals are like HERPES, easy to get, and impossible to get rid of! LOL! Good luck! :mrgreen:

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Michael R.
Real Estate Investor · NY · Member since 2008 · 313 posts · 87 votes
15y
Looking for a apartment complex in a c or d area might be a little much for a new investor. It would be even crazier to try to buy such a property with only 50$. If you are looking to get started with only 50$ you might have luck finding a single family property or similar and look for owner financing. Even then you will have closing costs and other fees and expenses that your 50$ wont cover. Sorry but it will take more than 50$ to start in this and any business and trying to buy an apartment complex with only 50$ must be a joke.
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OP
Real Estate Investor · Member since 2011 · 35 posts · 3 votes
15y
I've met a few people who have done apartments without their own money but want to sell their knowledge. I know there is a way to do it and telling me a bunch of negatives is not going to discourage me. Please only offer solutions if you have any.
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Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
chenelle, i dno't think michael was trying to be negative...i think he wsa trying to help you.let's say you do somehow get a building with no money down...allof a sudden, you have a tenant that's not paying...wellguess what, it's more than 50 bucks just to file for eviction at the court house lol..what if a furnace breaks, or you need to call the plumber for something lol...you need to have plenty of reserves with rentals, even if you are able to get creative financing somehow.
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Jonathan Tew
Real Estate Investor · Lawrenceville, GA · Member since 2011 · 48 posts · 8 votes
15y
I understand that you have $50 and yes it can be done but you are leaving a little information off do you have any assets now, do you have a company set up?
1 Reply
Rob Gillespie
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
15y
Hi Chenelle,
You can absolutely pull it off. You need to stick with the smaller buildings. I have a prospect to call tomorrow that has a 4 unit building with only one unit rented. the payment is around 1700 per month. I can get it no money down, but the cash flow is not gonna really be there. It will only bring in 2400 per month on a perfect day before vacancy an repairs. You will get your best deal working with a cash partner and stealing good deals.
An example I saw of that a couple of weeks ago, my buddy bought a 29 suite for 25k! Sure it needs a little love, but it was a steal!!!
There are a lot of "tired" landlords of mid size buildings that will let you take them over.
Just remember, bad deals are like HERPES, easy to get, and impossible to get rid of! LOL! Good luck! :mrgreen:
4 Reply
Stephen Moore
Real Estate Investor · Lake Charles, LA · Member since 2009 · 271 posts · 52 votes
15y
Originally posted by RobTheHouseGuy1:
Hi Chenelle,
You can absolutely pull it off. You need to stick with the smaller buildings. I have a prospect to call tomorrow that has a 4 unit building with only one unit rented. the payment is around 1700 per month. I can get it no money down, but the cash flow is not gonna really be there. It will only bring in 2400 per month on a perfect day before vacancy an repairs. You will get your best deal working with a cash partner and stealing good deals.
An example I saw of that a couple of weeks ago, my buddy bought a 29 suite for 25k! Sure it needs a little love, but it was a steal!!!
There are a lot of "tired" landlords of mid size buildings that will let you take them over.
Just remember, bad deals are like HERPES, easy to get, and impossible to get rid of! LOL! Good luck! :mrgreen:

These tired land lord deals u speaking of,are u listed or off market? and would u pursue these as sub2 deals or what?

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Rob Gillespie
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
15y
Originally posted by Stephen Moore:
Originally posted by RobTheHouseGuy1:
Hi Chenelle,
You can absolutely pull it off. You need to stick with the smaller buildings. I have a prospect to call tomorrow that has a 4 unit building with only one unit rented. the payment is around 1700 per month. I can get it no money down, but the cash flow is not gonna really be there. It will only bring in 2400 per month on a perfect day before vacancy an repairs. You will get your best deal working with a cash partner and stealing good deals.
An example I saw of that a couple of weeks ago, my buddy bought a 29 suite for 25k! Sure it needs a little love, but it was a steal!!!
There are a lot of "tired" landlords of mid size buildings that will let you take them over.
Just remember, bad deals are like HERPES, easy to get, and impossible to get rid of! LOL! Good luck! :mrgreen:

These tired land lord deals u speaking of,are u listed or off market? and would u pursue these as sub2 deals or what?

They are both listed and off market. One good way to find them is to look in the for rent section of the paper or craiglist. You are hitten them when they are vacant and most likely just put a bunch of coin into the property. Eviction court is another great fishing hole! LOL!
As for how to get them. Of course I would go after subject to first. Then I would go after Land contract, and if all else failed go after a master lease with an option. ( Those are listed from strongest position to weakest by the way) :mrgreen:
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
15y
In my area I am not finding this to be true at all.

All of my apartment listings are sold out and I am going for more. Tons of cash buyers liquidating stocks and everything else to jump into the real estate game.

Multifamily has both buyers and lenders in a frenzy.Other commercial asset classes in most markets have not hit bottom yet.

I hate to say this but 50 dollars is laughable.I wouldn't as an owner finance a deal where you the buyer only have 50 bucks to your name.

The odds of you defaulting are very high and then I have to spend a bunch of money getting the property back.

I am not saying it can't happen but you are looking for a needle in a haystack.You just won't be able to stack up to cash players or buyers putting 10% or more down to cover the risk of a seller owner financing them.

50 bucks is like a tenant wanting to get into a place no money down,no first and last,and no security deposit.

Now if you have other properties or assets you have to pledge collateral in case of default then it's a possibility.

The fact that you have 50 bucks makes me doubt this.Are you talking 50,000 or 50 bucks??
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Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
ok time for honest talk....i've bought a bunch of rental units in the past year, either owner financed with no money down, or sub 2...yes, you can definitely by a property this way...however, the property will need some work...what idiot landlord would sell a property no money down to somebody if it's producing income for him? nobody would i'd bet...i know i wouldn't...anyways, even whenyou do find this no money down property, it's going to take money to run--much more than 50 bucks..i'd work on building that number up..if you find a deal, flip it to another investor for a few thousand....then you'll be ready for the next one! :)
3 Reply
Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
15y
You mean $50k, right?
0 Reply
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OP
Real Estate Investor · Member since 2011 · 35 posts · 3 votes
15y
I love the spirit here! I do mean $50.00 but because there have been so many great suggestions it has given me some good direction.

I do have an entity set up and I'm going to go after some construction grants. The court house fishing hole made me laugh because I know it is true here. In my area the investors are not pulling real estate prices up so these solutions are exceptionally possible for me.

What different mortgage types could help finance an apartment complex besides balloon/arm?

Any suggestions for exit strategies while we are it?
0 Reply
Michael R.
Real Estate Investor · NY · Member since 2008 · 313 posts · 87 votes
15y
I agree with bryan. Sure you can get owner financing 100% but most of these houses are distressed- and will cost more than 50$ to get up to par. Plus you will have closing costs as well. Bought a few 0 down houses this year and even though it was 0 down it still cost me between 3-5k each to get everything up and running.

Sure you could work with a cash partner as rob suggested but in my experience it is hard to find someone to put up cash unless you have experience to show.

I really dont see how you will get far with 50$ though. I would have not waisted my time forming an entity and saved that money instead to put towards my first investment.

Opinions on an exit strategy? Kinda an open ended question no?

Only real solution I can offer is to find a part time job and save up a few thousand for something small to start. Sorry its not what you want to hear but 50$ isnt going far. I cant fill up my car for 50$ let alone buy an apartment complex.
1 Reply
Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Sounds like you're hoping for some beginner's luck; you may end up being disappointed with the type of luck that befalls many beginners (usually they experience BAD luck).

Some good advice already in this thread: be sure to have enough funds to cover incidents that will occur in the rental business. Evictions and repairs are just a couple of those. I do wish you GOOD luck with your pursuits - but it would be misleading to not give realistic advice here.
0 Reply
Jonathan Tew
Real Estate Investor · Lawrenceville, GA · Member since 2011 · 48 posts · 8 votes
15y
You might want to check into a LP (Limited Partnership) Limited Partners contribute money to the LP but do not take part in the business operation at all. Also you might want to start a entity so then when you set up your bank account if you don't have excellent credit you might want to find some that would be willing to help you with a business credit card and get use the credit cards to get you started.
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Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
Jonathan,I've been asked to personally guarantee all business credit lately...have you had a different experience with business credit in the last year??
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OP
Real Estate Investor · Member since 2011 · 35 posts · 3 votes
15y
Everyone here assumes I have 0 experience, I feel so welcome haha!

I've already done that first deal everyone speaks so ghostly of and I'm not about to jump into a liability pool without an entity.

Anyways, I'm going to reverse out of this topic since it seems there is more than solutions being offered. I appreciate the concern but please do not spam my threads with multiple posts and doubtful opinions.

While I'm at it, I have a few more deals open in Houston TX. One is a fresh renovation with a motivated seller needing to sell their $50k home for $32k. If anyone is interested, check the rehab section.

Thank you everyone.
0 Reply
Tod R.
Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
15y
Hi Chenelle, Let me make it official, Welcome to BP!

I know you didn't ask to be critiqued, but when you become a BP member, fellow investors will give you an honest opinion based on a lot of experience. The intention is to try and arm you with as much information as possible to give you as big of a opportunity as possible to be successful. That's just what we do. Take it as a welcome!

That being said, if you are in Houston, have you checked out Lifestyles Unlimited? Although I'm not a member, I know they would be glad to work with someone who has already decided that they want to jump on in the REI waters.

Please be sure to keep us all updated on your quest.
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OP
Real Estate Investor · Member since 2011 · 35 posts · 3 votes
15y
Ah! I see, thank you! I will take this as a giant welcome then!

I have seen lifestyles unlimited but I left Texas due to family matters. Their workshops are good.
1 Reply
Tod R.
Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
15y
What cities/area of the country are you interested in?

0 Reply
Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
15y
Lifestyles Unlimited is a really bad joke. I see why you think $50 is going to work for you.

Check out their website, it is unbelievable nonsense.
0 Reply
Tod R.
Investor · Southlake, TX · Member since 2009 · 950 posts · 338 votes
15y
Originally posted by Jeff Sielicky:
Lifestyles Unlimited is a really bad joke. I see why you think $50 is going to work for you.
Check out their website, it is unbelievable nonsense.

Ouch...Have you had any experience with them, or just hate their website?
0 Reply
Anthony E Russell
Real Estate Investor · Los Angeles, CA · Member since 2008 · 148 posts · 22 votes
15y
Originally posted by RobTheHouseGuy1:
Hi Chenelle,
You can absolutely pull it off. You need to stick with the smaller buildings. I have a prospect to call tomorrow that has a 4 unit building with only one unit rented. the payment is around 1700 per month. I can get it no money down, but the cash flow is not gonna really be there. It will only bring in 2400 per month on a perfect day before vacancy an repairs. You will get your best deal working with a cash partner and stealing good deals.
An example I saw of that a couple of weeks ago, my buddy bought a 29 suite for 25k! Sure it needs a little love, but it was a steal!!!
There are a lot of "tired" landlords of mid size buildings that will let you take them over.
Just remember, bad deals are like HERPES, easy to get, and impossible to get rid of! LOL! Good luck! :mrgreen:

Rob,

How do you define "mid-size"?
0 Reply
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Real Estate Investor · San Antonio, TX · Member since 2010 · 122 posts · 17 votes
15y
My advice is to save up. If you think you are going to walk in a bank with $50 and get a no money down loan, you're wrong.

Hard money lenders are different. Research this on BP. Lots of good articles that show you how to do it with little or no cash. These asset based lenders are going to be your best bet. Everyone on here has made good suggestions. Don't take this as "spam" It's constructive criticism. If you ask a question or ask about a deal on here..expect it.
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Akali Dennie
Commercial Lender · Miami, FL · Member since 2011 · 19 posts · 4 votes
15y
Hello Chenelle. Welcome to the forum! I will give you as much help as possible in your quest. Is it possible to own an apartment building with $50? The answer is yes. I will go thru each option with you so you can fully understand. The obvious option is to finance the property. But to do that, you obviously would need to contribute 15% - 25% into the deal. You dont have that so this idea will not work. The second option would be to investigate and read all there is on the "master lease option" technique. This technique does work but takes ALOT of work. The last option is to enter into a Joint Venture with someone. Your agreement could be that you find excellent deals for investment and you receive a percentage of ownership. Every investor started somewhere so I applaud your ambition. Good luck!
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Horatio Pickett
Member since 2011 · 5 posts · 0 votes
15y
I have about 70k but I do not want to deplete my whole savings to get an apartment complex. Can anyone tell me if 50k doable to get apartment complex and perhaps finance the rest? I really need some help with this. So any suggestions I will definitely consider. I really don't want to partner with anyone. I prefer to do it myself. Any ideas?
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