HI BP fam, I've always dreamed of owning an apartment building. I'm a new investor. I currently have a duplex and have been saving my 20-25% for my next acquisition which would have most likely been a triplex or quad. I've been going about it the safe and slow way, but I've realized in order to get what I really want(apartment building) I'm going to need a lot more money.
Ive flirted back and forth with hard money but I am reconsidering it now BUT I'm also considering a joint venture entity. The people that I know with apartment buildings have all had partners at some time or another. I wanted to know which strategy do you guys think is my best option and whats the best and smartest way to go about attaining it?
I just moved into my duplex a year and a half ago. I have some money saved not much, but I have excellent credit. I was thinking about a 5-15 unit building. Despite me only having a duplex and not having a lot of skin in the game. I know it is achievable, I just need to know the best way to achieve it, giving my circumstances
Check out Michael Blank's podcast and site. He focuses on apartments and specifically raising capital for them. You are also going to need to foster relationships with lenders. Michael addresses that as well and Jake and Gino have podcasts and a website that get into their credibility book that is used for lenders (and other service providers). Old Capital Lending has good podcasts that provide exposure to commercial lending and apartment investing on a larger scale and they have a few guests that started off smaller or as passive investors in other's deals. Rod Khleif and Kevin Bupp's podcasts on apartments are very good too.
Search through the BP podcasts for the apartment ones. I listened to one early this morning, #84 with Chad Carson, that was excellent. It was not on apartments but he discussed how he works with private lenders.
All this information provides a decent foundation from which you can begin to take action. Hope this helps. Good luck with your dreams.
@Mike Dymski - I agree I actually work with Old Capital on most of our acquisitions and that relationship is extremely valuable thru all the processes -- While you are listening to Old Capital podcast - check out #33 you will hear our story - I hope you will find some helpful nuggets of information!!
@Bonnie Staples it's good to hear from podcasts guests. I just checked my phone and have listened to your episode. Hopefully it can help Jabari. The Fannie vs Freddie fight of the century episode they just did was funny. I've spoken with James Eng and he posts on the site every once in a while. I wish we had the equivalent of an old capital in my market but that can take a large metro to draw.
The investment clubs must be very active in TX because many of the Old Capital podcasts guests are investors in one another's deals. Sounds like a modern day gold rush has been going on there in apartments for a little while. It also sounds like labor and materials are very affordable.
I know for commercial real estate lenders want to see 20% down. Are there any lenders who are willing to deal for 5% to 10% down with established credit and real estate investing history? I just closed on my first building with a high cash flow, and my realtor has found another one with similiar cash flow ($2,000 after all expenses and mortgage). Is there any way I, as a new investor, could jump on this deal given the fact that I just closed earlier this week? Obviously my savings are mostly depleted and I now have a ton of inquiries on my personal credit.
@Mike Dymski - Mike I agree Old Capital is amazing and James is my go to guy. He is amazing and very responsive --- I'm pretty sure he is from another planet - as it seems he never sleeps!!
@Ray Harrell - Hi Ray, Most commercial lenders will want 20-25% down. However to help with that we primary Syndicate deals - which in simple terms means we do group purchases -- There are rules around that but they are very doable - And it helps you leverage all the resources available. Example one of our purchases the down payment was $1.2 million - and I promise we do not have that laying around. So we syndicated the deal and closed the deal with 16 other investors. This might be something for you to consider.
So are those the only options?
@Ray Harrell - Hi Ray, There may be other options out there - I just have not found that to be so. We have closed 14 Commercial Apartment Loans - and each one required 20-25% down. I wish you all the best in your hunt. Should you ever come to the Dallas area please be sure to look us up.
Welcome to BP.
Your are running in the right direction. Most lenders want 20-30% down. It's a great idea to pool money and get a bigger building. Your cash flow will be great.
Where can you find syndication deals in your area?
@Taye N. you find listed properties through brokers. You can find syndicators on BP to invest with and they'll send out their deals in email blasts. Does that answer your question?
Always invest with people you know. Not someone on the internet or someone you just met at the Reia.
Have you considered raising capital from friends and family? If they do well, I'm sure the word will spread. But it's always controversial to do business with family and friends but just an option if you are comfortable.
It takes a while to save that money. For financing when I bought a 15 unit (no track record in commercial) they wanted 30%. I would try and see if you can find someone to partner with you. That duplex will be helpful. Especially if you have two years of tax returns showing you made it work. The numbers is what they will base it on. You could also try and track down owners of these places and ask if they would finance you. I have tried that myself no luck yet with yet though.
Good luck keep and spinning the wheels you will get into one,
Partner w/experts to gain credibility. Seek out partners that you can assist in some way to add value to what they are doing. You gain knowledge, insight, credibility by working w/credible partners. This is one way that I did it. Checkout some of these podcasts. Go to my BP profile page and listen to the 3 podcasts links there. Additionally, read this from my coach.
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