New investor looking into commercial real estate

Member since 2023 · 5 posts · 6 votes

I've been looking for my very first residential rental of my own for over a year and due to not having a ton of startup cash (70k) and the fact that any good deal i found is purchased within days of being listed, I've had no luck. I work a M-F office gig but looking to supplement. Investing wise, I'm looking at switching gears and getting into multi family properties such as a smaller apartment building. Does anyone have any advice on best practices to fund that? Again, 70k of my own cash, over 6 figure personal salary. No LLC yet, so I'm at ground level and need some advice from a guru or two.

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DeAndre White

Investor · Ohio & Fort Lauderdale · Member since 2021 · 75 posts · 51 votes

@Stephen Horan @Dino Dziljaj We're working on similar sized multifamily deals in Columbus Ohio (5-30 unit range). BiggerPockets is a great place to find partners and partnering is a great way to do deals.

I'm always available if you want to chat sometime about multifamily.

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Steve Daddeo
Investor · CT · Member since 2022 · 36 posts · 18 votes
1y
Hey Dino, here are a couple financing routes you might want to consider

FHA Loan – If you're open to house hacking and plan to live in the property, you can get in with as little as 3.5%–5% down. It's a great way to get started and build equity while living rent-free or close to it.

DSCR Loan – Personally, this is the route I prefer for pure investment properties. Most DSCR lenders want around 20% down and a DSCR ratio between 1.15 and 1.35, depending on the product. The big plus here is they underwrite based on the income and expenses of the property, not your personal DTI, which gives you a lot more flexibility if you're scaling.
If you're serious about multifamily, it could also be worth building relationships with local commercial brokers and starting to network with potential partners.

Happy to connect further if you want to bounce ideas!
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Charles Seaman
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
1y
@Dino Dziljaj When you say "smaller apartment building," how small are you thinking? I can offer more meaningful feedback if I have a better idea of what you're looking to buy.
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- Dino Dziljaj
  OP
  Member since 2023 · 5 posts · 6 votes
  1y
  Quote from @Charles Seaman:
  
  @Dino Dziljaj When you say "smaller apartment building," how small are you thinking? I can offer more meaningful feedback if I have a better idea of what you're looking to buy.
  The ones in looking at in the detroit michigan metro and lansing michigan metro areas are anywhere from 6 units to 16 units. I've seen prices ranging from 450k-1M. I've helped manage 5-6 simultaneous single family rentals for my father but thinking rather than getting 4-5 houses, to get an apartment building. I know things are different with one versus the other but I'm open to learning the pros and cons.
  1 Reply
Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
1y
It might be wise to talk to a few (( local )) banks, and savings and loan and credit union type lenders who do small multifamily real estate loans, and get to know them and what they offer.

Understand your options regarding financing.

Paying attention to things like the interest rate of course, but also things such as the occupancy rate needed for the loan, and the amount of fix up needed and if the loan is going to cover that, or you're going to have to come out of pocket with that.

It would also benefit you to have lined up a property inspector who can go through the units with you and the property as a whole and give you a written report on the things that are wrong with it.

As well as having a sewer scope done to ensure that when the toilets flush and the sinks drain the refuse makes it to where it's supposed to go doesn't get backed up.

Sometimes the lenders will require repair work to be done before the loan closes or very soon after.

This could include grinding cement that has been heaved until it's smooth with the surrounding cement, or replacing a roof, Or other things. It's best to talk to them about this beforehand so you can be on the lookout for these things when you are looking at properties.

And being Detroit having a list of contractors who will go into the city and whatever area you're buying in and work there would be a good thing to have on hand before you start out.

You should also get an idea what your insurance will cost you for the year, and your updated property tax amount once the sale happens, and once any fix ups are put in place.

Also getting a crime record for the property from the local police will alert you to what kind of building it is (Maybe because not everyone calls the police).

Plus a myriad of other things.

Good Luck!

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Christine Mulkins
Rental Property Investor · Medford, OR · Member since 2017 · 94 posts · 115 votes
1y
My best advice would be to call local lenders and find out what you qualify for based on the cash you have for a down payment amount and loan terms. This will help you determine what you can afford and/or what you're working towards. When a lender tells me they require 25% down for a commercial multifamily loan (5+ units) and the interest rate, amortization, loan terms, closing costs, reserve requirement, debt service coverage ratio (dscr), then I can start searching for a property that fits the bill :) getting pre-qualified helps you come in strong on an offer when the right property comes up.
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
1y
@Dino Dziljaj $70k => roughly $300k acquisition with 20% down (plus closing costs, taxes, insurance, etc.).
More importantly, given you've stated, "any good deal I found is purchase within days" - where are you looking and what Property Class are you targeting?
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Troy DeLong
Real Estate Agent · Lansing, MI · Member since 2020 · 172 posts · 94 votes
1y
@Dino Dziljaj If you're saying that you've got $70k to throw into a real estate purchase and not just in your savings, then I'd say you can get something decent in Lansing. Sounds like you've got good W2 income and if you've got a good credit score to go with it, I'd stick with a conventional loan (generally 20-25% down) to jump into your first property. DSCR won't have as good of terms and it's really only for when people can't support a conventional loan with their credit or DTI.
Lansing has a local credit union (Consumers Credit Union) that was offering a 10% down investment loan (at higher interest) last year to non-owner occupants. You could reach out to them and see if that's still an option.
Also, I'm an agent / investor out of Lansing, MI and would be more than happy to chat with you about our local market if you'd like. Let me know!
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Stephen Horan
Rental Property Investor · Rocklin, CA · Member since 2018 · 42 posts · 9 votes
1y
Hey Dino, I have the same interest. Im willing to sell a couple places to have good capital and open to looking at the benefit of partnering up.
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Eshe Harvey
Developer · Chicago · Member since 2025 · 111 posts · 103 votes
1y
Quote from @Dino Dziljaj:

I've been looking for my very first residential rental of my own for over a year and due to not having a ton of startup cash (70k) and the fact that any good deal i found is purchased within days of being listed, I've had no luck. I work a M-F office gig but looking to supplement. Investing wise, I'm looking at switching gears and getting into multi family properties such as a smaller apartment building. Does anyone have any advice on best practices to fund that? Again, 70k of my own cash, over 6 figure personal salary. No LLC yet, so I'm at ground level and need some advice from a guru or two.

Hey Dino,
One option you might want to consider is doing a few wholesale deals first to gain additional capital. It can be a great way to stay active in the market, build key relationships with sellers and buyers, and raise extra cash without needing to buy properties yourself right away.
Plus, it will sharpen your negotiation and deal evaluation skills while continue preparing you for your first multifamily acquisition.
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Wale LawalBusiness Member
Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
1y
@Dino Dziljaj
It sounds like you're in a great position with solid savings and a strong salary. Since single-family deals are moving fast, shifting your focus to small multifamily properties is smart — you can use options like FHA multifamily loans (as low as 3.5% down if you live in one unit) or traditional commercial financing with partners or creative structures. Work on funding strategies and setting up an LLC.
Good luck!
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Kate Sanchez
Member since 2025 · 250 posts · 101 votes
1y
@Dino Dziljaj Great thinking! Have you considered partnering or using low-down multifamily loans to stretch your $70K further and jumpstart your path into apartment investing?
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DeAndre White
Investor · Ohio & Fort Lauderdale · Member since 2021 · 75 posts · 51 votes
1y
@Stephen Horan @Dino Dziljaj We're working on similar sized multifamily deals in Columbus Ohio (5-30 unit range). BiggerPockets is a great place to find partners and partnering is a great way to do deals.
I'm always available if you want to chat sometime about multifamily.
2 Reply
Kerlous TadresBusiness Member
Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
1y
Hey Dino, with 70k cash, I'd recommend leveraging a conventional loan and potentially partnering for additional capital. Set up an LLC for liability protection.
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