What arethe financial requirements to purchase 15+ unit building?

[Quincy P.]

I recently purchased a 4-plex and would like to start setting up for purchasing at least 15+ unit building in the Minnesota/Wisconsin area. I am wondering how cash reserves are reviewed for such a purchase? I would be pulling the down payment from IRA/401K and looking in the price range of $700K - $1.5MM. How much cash on hand would I need for this? Is there any other things I need to be aware of? Sorry for all the total newbie questions, but I need to start planning now. It's either a multi unit building or a liquor store to plan for in the next 2 yrs.

[Andrew Johnson]

Quincy P. To be overly general:

25% down
9 months PITI
Net Worth > Loan Amount
Full recourse
5 or 7 years fixed-rate
20 or 25 year amortization table

And be prepared for a rough first year. There’s always some kind of “stabilization” that happens over the first ~9 months. Tenants move out, you find nit-pick issues that didn’t show up on the inspection, you’ll find one tenant you wish wasn’t there, etc. It just happens.

If it doesn’t happen, great! But it’s best to have a little money set aside in case that it does.