Prospective Multi- family

15 Replies

I’m new to real estate but really want to dwell into a 4 plex property in Houston. They asking 500K and rent is between 1350-1400. Just trying to figure out how much is required to put down. I’ve read books that say you can get properties for zero down but how true is that? great. If I don’t have the 20% in full to put down what other routes are available? I know the property had some renovations done in 2013. Landscaping looks good and the neighborhood is older but nice. Any advice on what steps to do next would be great.

Hello @Willie Rogers

I am working on getting my first multifamily property. Based on my research you usually need approximately 70-80% down for a multifamily property. I would recommend going over Michael Blank's 10 minute analysis to give you an ideal if underwriting makes sense. Here is a link to the video:

https://www.youtube.com/watch?v=K1joIgoPwZg

Let me know if you have any further questions. 

Talk to residential lenders for 4 family or less. It would be an owner occupied residential loan not a commercial loan. You need to analyze the numbers for it and you will need reserves. I would say 20% but for a residential loan where it is owner occuppied you probably have other options.

Colleen F.

    Thanks for the advice. I was curious if I need to be qualified first before I can look at the marketing package.

    @Willie Rogers

    Hi Willie,

    the first question you need to ask yourself is "Why Houston".  

    I think your first step is to take a deeper dive into multifamily education and learn how to select a market, underwrite a deal, manage the asset and finance the property.  

    If you don't have the down payment, you can always raise the capital from investors, bring on a partner or try to secure owner financing.  These are all strategies that you should focus on when learning how to invest in multifamily properties

    Gino

    Investors need 25% down for non owner occ multi family homes.

    Updated 22 days ago

    - I should clarify that I am talking about residential (not commercial) financing and m/f units from 2-4, non-owner occ.

    @Willie Rogers I agree with @Gino Barbaro being that real estate is multi faceted business involving educating, underwriting, financing, managing and the exit. Right now with compressing cap rates, many investors are over paying for deals and this is where the financial analysis becomes so key in determining the value and how much you should pay. I'm in the MFR space owning multiple apartments and have built a financial model that I use daily to analyze mainly multi million dollar apartment complexes, but I help investors like yourself analyze smaller deals as well. I have some examples if you look at some of my previous posts, so please let me know if I can be of any assistance. Don't worry about the downpayment because money chases deal, so that's what your focus should be right now. Best of luck.

    The reason for Houston is because I’m from there. I want to start in familiar territory. I know the area where the property is also. I’ve been reading up on multifamily investing for the past few weeks. Still figuring it out while doing my due diligence on asking for advice. I’ll definitely reach it if I have more questions just to make sure I’m headed in the right direction. Really like this group!

    Subscribe to the Houston Business Journal. You may be from Houston but you need to look where Houston is going. I would suggest right outside Houston: Spring, Katy, Humble, Pasadena, Friendswood, Cypress

    I am buying my first multi in Old town Katy, because it is way less volatile than Houston but close enough for folks to drive out there.

    I would consider Baytown right now, there is $500M going into steelworks soon and all the labor force is going to need somewhere to live.

    @Julie Nearing

    Hi Julie

    I am closing on a 67 unit deal today, and the down payment was 30%. We closed on 110 units in December and the down payment was 15%.

    We closed on 282 units with no money down. There is no general rule as to how much you need to put down on a deal.

    Syndicators, for the most part, don't put any of their money into a deal.

    That's the beauty of commercial real estate.  You can be creative and every deal is different

    Gino

    @Jorge De Jesus the area I’m looking at is 1960 and 249. I’ll definitely subscribe to the Houston Business Journel. Never thought about Baytown but I’ll look into that too. Not living in Houston has its drawbacks. But at least I have people that can look at properties for me and give me feedback. Thanks for the info. Memorial City is another area I like too. 

    @Willie Rogers there is great opportunity in Memorial. One of my mentors owns lots of commercial land there. My OPINION? I’d cut my teeth elsewhere, gain traction while keeping an eye on Memorial. If you can find a hot deal in that area and it’s just you and the seller then you can get really creative a la Jake and Gino

    Originally posted by @Gino Barbaro :

    Syndicators, for the most part, don't put any of their money into a deal.

    Gino, agree that every deal can be structured however creatively that you are able. However, my experience is that almost every syndicator has some of their money into the deal. Maybe it's just the syndicators I know but I definitely invest in my own deals and everyone else I know does too.

    @Michael Le

    Hi Michael

    most syndicators that I know take the GP side of the deal and do not use their capital for the GP. Their expertise in putting together the deal, finding, financing, etc is the reward.

    If they put money in the deal, it is on the LP side.   My point was that there are a lot of investors out there who are doing deals without their own money. They do have a ton of experience and a great track record.

    Gino

    Hey @Vincent Popovski

    Are you looking for multifamily properties?

    Would love to connect and maybe grab some coffee and try to find some deals!

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