I would like to get started with apartment investing. I'm a 18 year old college student who would like to get up and running in the real estate business. I have never dealt with any type of real estate before so some might think that jumping right into apartment buildings would be a bad idea. I've done some research on the process of buying apartment buildings but the information I found was very vague and unclear. There are a lot of topics I did not understand. Since I'm just getting started with the research I'm a bit overwhelmed. I have so many questions and was not able to locate answers.
1. Can I get pre-approved from a bank/lender before going out and looking for an apartment building?
2. Can I buy an apartment building with no money down?
3. Can a person as young as I am invest in real estate and get adequate financing?
4. How does refinancing work?
The list goes on and on and I don't really know where to begin.
Can someone please explain exactly how the process of buying an apartment building works and how to go about it?
Any help would be appreciated.
@Raheim H. welcome to BP and congrats on getting started.
1. Apts buildings that are 5+ units are evaluated by lenders based on the income they generate. While you can give the lender some paperwork on yourself prior to finding a property, they are mostly interested in the property itself. You or your biz partners will also need to qualify from an income and cash reserves standpoint.
2. Yes but it's very difficult to find. Essentially you'd need to do some sort of creative financing where you have a motivated seller who is willing to give you control of the property with $0 of your own money in it. It's possible but not likely.
3. Age isn't relevant but experience and financial strength is. You'll want to talk to a couple local lenders and ask what it would take to qualify for a mortgage on XYZ size of property. Then, start finding the people who can be on your team who fit that profile.
4. You have a property that is currently financed then you decide to finance it again. It will be appraised and, depending on the lender, property's cash situation and new appraised value, you might be able to get cash back out after closing.
I recommend reading The Complete Guide to Buying and Selling Apartments by Steve Berges. It's a good book for beginners.
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From one newbie to another welcome @Raheim H. great insight. Especially with finding local lenders and team members. Going to apply it myself, thanks
@Sonja Pope thanks a lot. Yes, real estate is definitely a team game. And fortunately that benefits people just starting out because you can leverage other people's years of experience to get you into deals.
Welcome. Fill in the foundation below.
Check out the Start Here page http://www.biggerpockets.com/starthere
Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.
Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having over 70 past ones to catch up on.
Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers.
Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook
Consider checking out HUD homes for small multi's owner occupied gets first crack.
You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.
Download BP’s newest book here some good due diligence in Chapter 10. Real Estate Rewind Starting over
When you say "apartment building", are you meaning a small multifamily, or a large one? Owning two, three, or four units would give you a fair bit to deal with if you've not owned or worked in the industry before. Even one tenant (sometimes) can be hard work! I started as a 26 year old, as an assistant manager of a 120-unit complex in Beaverton, Oregon, and honestly, it was a little scary at first. The resident managers were a much older couple, and had somewhat emotionally checked out. It took about 3 months to get to know most of the tenants, and a few more months to get to know the rest, including the new ones that moved in. Every day brings new projects to deal with: you'll have maintenance requests, personal requests, pet issues, parking problems, utility hassles, clean up duties, staff conflicts, and many many more things to keep you occupied. As the person in charge, you almost have to know everything, even if you don't! Then, of course, there will be emergencies. On top of those, you'll have rents coming in, books to balance, late rents to chase, and all that goes along with that. There really is an AWFUL lot to learn. My suggestion would be to either start small, or enter the business as a leasing agent or an assistant manager. You can learn a lot just from being on a property day by day, but not necessarily having to make all the decisions. Within a few months you can certainly get yourself promoted and take on more responsibility. One little thing to remember, it doesn't matter how experienced you are, tenants will always come to you for answers. Even if you don't have them all, with a little time under your belt, you'll have the right mindset to figure it out. I wish you the very best of success in your chosen path!
@Joe Fairless, @Nick Keesee, @Sonja Pope, @Paul Timmins, @Gavin Peacock
Thank you guys so much for all of the information. I bought the book The Complete Guide to Buying and Selling Apartments by Steve Berges, 2nd Edition and it should be arriving today, 6/20/2014. I'll get reading right away.
Paul thank you for all of the links. I'll be sure to check those out too.
@Raheim H. my pleasure and let me know how you like that book. I think it's going to be a good intro for you.
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