What is the process when acquiring apartment buildings? You put it under contract, then raise capital and obtain the loan, then close, then go in with property management co, renovate, operate, and then disposition? Or you don't put it under contract until you secure the capital?
If you are raising money, you don't collect the money until the property is set to close. The alternative to that is raising money using a fund, in which case you raise all the money, and then go out and identify/buy the property, depending if its blind or semi-blind.
@Arturo Borges assuming your doing a single asset LLC and not blind pool arrangement. You really should have your investors first if you are starting out. There is a lot of risk of losing hard money (now days 20-200k) by not being able to preform.
The saying the deal will attract the money. Kicker is you need a track record.
@Brian Burke has written passionately about the fallacy of "if you have the deal, the money will follow"
As a lender in this specific space having your capital is paramount. Whether it is the sale of a previous property, cash from a pool, funds from family and friends etc. you will want to have the funds secured ahead of time. Just like when purchasing a home to live in, you don't want to fall in love with a property you cannot afford! Nothing is worse than seeing a enormous CAP rate and then realizing it is out of your price range, then you compare all other properties regardless of condition or specifics to the one you initially saw.
Process as I see it regularly is:
Obtain financing for remaining funds if needed
Vet management companies
Find the right property
Renovate or operate depending on the specifics of the property and market.
Hope that provides some help!
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