Investor · Garland, TX · Member since 2015 · 110 posts · 43 votes
I am planing to purchase a 10 unit commercial property. I'm concerned I may not be 100% prepared from day one. Should I consider using a professional multifamily investment group to represent my interests during the financing, due diligence and acquisition stages?
@Michael Bracken The key is finding experienced partners who have successfully analyzed, acquired and managed properties that you aspire to own. While multifamily investment groups can be a good source of experience partners, it's not the only place to look for the expertise and advice that you seek. Consider consulting with a mortgage broker to gather a conservative perspective on your underwriting, review your business plan and pro-forma with a local property manager who has experience managing properties of similar type, class and location, and/or build relationships with local deal sponsors and operators by attending local REI events or meet-ups.
While there are difference between SFRs and MFUs, your first hurdle is rental management - - have you ever? If not, I recommend you take at lease a year of managing a SFR, at least through one lease renewal cycle. You need various forms, accounting software and to become familiar with Fair Housing regs. Starting off with a 10unit and no experience will expose you to making 10 simultaneous mistakes at a time instead of learning to swim in the shallow end of the pool.
@Michael Bracken I would highly recommend that you do get some help.
I personally did not join any of the "guru" groups out there and still survived it. I DID however have a great team assembled around me from the lawyers to the property management, lenders, etc.
If you're looking for some guidance, I'm sure I can find some time to chat and give you some pointers. If you're looking for more of a "hand holding" deal I'm not sure I'll have time for that but you can go to some of the local MF meetups and meet, network and maybe even find a coach or a partner.
Either way, be careful because we're at the top (or close to it) and if you miss on real estate rule #1 (make your money when you buy) it could be very painful.
Oh, and before anyone jumps on me, "location, location, location" is rule #2 in my book :-)
@Jeff B. That's right. I have a SFR I've managed for years but you know what? The tenants have all been great. I can count the mistakes I've made on 1 hand. I need to count on two!
Michael Bracken I'd definitely have a property manager in place at the close of sale. Just an echo of what others have advised in case you're taking a poll...
That said, am I reading your post correctly in that you're looking for an adviser to help you to search, review, analyze both the property as well as your funding strategy? Or is the deal in place and you're looking for advice on how to go from the thought of "I want to buy THIS property" all of the way through the executive phase of getting the deal done?
@Joseph Gozlan I would like to talk some time. I've been invited to meet with a property management firm in the area just to talk and learn from them. I'm gonna officially abandon my plan for a 10 plex out of state. A local 4 plex will be nothing to sneeze at for where I'm at. That will be a challenge in this area right now especially to work in professional management. It will be a great learning experience.
Plan:
(a) I've applied to the Veterans Commission for paperwork to get my 5 years no franchise tax LLC.
(b) Cozy up to a local credit union to refi cash out two properties.
(c) Receive conventional financing from credit union from 4 plex.
(c) Use MLS and compile list of properties and cold call (I've done with success) owners.
(d) Interview Property Managers
(e) Purchase property. Since I like to talk and have been in business in the area for years I already have a business CPA, real estate contract attorney, contractors and friends that do local fix and flip full time. What could go wrong??
Great questions Andrew Johnson . I have not found a prop and won't even be looking until I have financing and a mentor in place. Possibly a partner. I would feel comfortable with SFH as I have experience in that area but not multifamily. I don't want to start up another SFH business out of fear that I don't understand multifamily. So my plan is to meet the pros, separate the wheat from the chaff, be humble, teachable and start again with what ever multifamily deal is appropriate for me.