New to multifamily and syndication investments

Multi-Family and Apartment Investing
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New to multifamily and syndication investments

Arnel Bueno
Member since 2020 · 10 posts · 3 votes

Like some members in this forum I'm also new to investing in multi-family rentals but I've been educating myself about it for the past couple of months. I'm a little late coming(hopefully retiring in about 5 years) in to this field but I think I have enough resources to (cautiously) dive in and get my feet wet. With my primary residence free and clear and using the equity on it with an average 830 credit score our local credit union estimated that I can qualify up to mid 200k on a heloc. I am mostly invested in index funds on my retirement and non retirement accounts and have had tremendous gains past few years but the uncertainty has always been a concern. From what I've read so far investing in 5-plus unit apartments would make more sense and may provide better ROI than single family assuming good cap rates and cash flow. Not sure if I can find potential investment here in Colorado Springs area since the market here seems to be peaking at the moment. I've also looked at some RE syndication companies offering attractive IRR with some tax benefits. I'm pretty sure I'm not the only one in this community with a similar situation and experience and would like to know what you think. Thanks and I appreciate your comments.

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Loren Jacobs
Investor · Bashaw, Alberta · Member since 2017 · 18 posts · 12 votes
6y

Hey @Arnel Bueno,

As you mentioned, investing in multifamily passively can be a great place to start.  Although, @Eric Johnson is absolutely right, you must have a solid understanding of the entire multifamily process, acquisition all the way through disposition, in order to ask the right questions and effectively vet syndicators.  This isn't necessarily a bad thing, it sounds like you want to learn the process anyways and there are a lot of great resources out there.  The pros are that, if you decide to start by investing passively, you get a behind the scenes look at what actually goes on and how the deal is put together and executed.  You also get access to the management team and can ask away to further your education.  Then, take everything you've learned and put it into your own multifamily deal.

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  • Bjorn AhlbladPro Member
    Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
    6y

    @Arnel Bueno Looking for more doors is definitely a good idea. My wife and I bought a 12 unit a couple of years ago and it has been an outstanding buy. My wife is the PM, we have done a little rehab here and there and raised rents at every tenant turnover. Definitely would buy another if I could find one.

    0Reply
  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    6y
    Originally posted by @Arnel Bueno:

    Like some members in this forum I'm also new to investing in multi-family rentals but I've been educating myself about it for the past couple of months. I'm a little late coming(hopefully retiring in about 5 years) in to this field but I think I have enough resources to (cautiously) dive in and get my feet wet. With my primary residence free and clear and using the equity on it with an average 830 credit score our local credit union estimated that I can qualify up to mid 200k on a heloc. I am mostly invested in index funds on my retirement and non retirement accounts and have had tremendous gains past few years but the uncertainty has always been a concern. From what I've read so far investing in 5-plus unit apartments would make more sense and may provide better ROI than single family assuming good cap rates and cash flow. Not sure if I can find potential investment here in Colorado Springs area since the market here seems to be peaking at the moment. I've also looked at some RE syndication companies offering attractive IRR with some tax benefits. I'm pretty sure I'm not the only one in this community with a similar situation and experience and would like to know what you think. Thanks and I appreciate your comments.

     Arnel,

    Multi family is the way to go.

    You have multiple tenants paying down your mortgage and giving you money every month.

    Since it has multiple tenants, you can afford to hire a property manager to manage it for you so you will have more time to buy more buildings.

    The key is finding the right deal and knowing how to underwrite it.

    If you need help let me know.

    1Reply
  • Eric Johnson
    Lender · Chicago, IL · Member since 2016 · 653 posts · 313 votes
    6y

    Hi @Arnel Bueno,

    You have the right idea going into a 5+ as the other two users have commented here. Be CAUTIOUS of syndications as you need to vet them thoroughly. Do not give anyone your money and to later find out the skipped boat because they messed up the deal, or for any other reason. 

    If you qualify for $200,000 you can put 30-25% down on a 5+ building. I actually fund commercial property as my business, would be glad to walk you through the steps and give you any information that can help. I'll shoot you a connect!

    0Reply
  • Loren Jacobs
    Investor · Bashaw, Alberta · Member since 2017 · 18 posts · 12 votes
    6y

    Hey @Arnel Bueno,

    As you mentioned, investing in multifamily passively can be a great place to start.  Although, @Eric Johnson is absolutely right, you must have a solid understanding of the entire multifamily process, acquisition all the way through disposition, in order to ask the right questions and effectively vet syndicators.  This isn't necessarily a bad thing, it sounds like you want to learn the process anyways and there are a lot of great resources out there.  The pros are that, if you decide to start by investing passively, you get a behind the scenes look at what actually goes on and how the deal is put together and executed.  You also get access to the management team and can ask away to further your education.  Then, take everything you've learned and put it into your own multifamily deal.

    2Reply
  • Ronan DonnellyPro Member
    Investor · New York City, NY · Member since 2012 · 332 posts · 385 votes
    6y

    Hi @Arnel Bueno, it sounds like you have been fiscally responsible which has now put you in a position to leverage your capital and credit to help generate additional equity and cashflow. Real estate is one of the best ways to achieve equity growth and cashflow especially when you consider the impact of leverage and tax benefits.

    In terms of what strategy to follow it sounds like you would prefer to leverage your capital for somebody else’s time and expertise in a passive investment and have therefore arrived at syndications. Multifamily syndicates are a good option in that value-add plays featuring class B/C apartments have more downside protection than other strategies (people tend to rent more during downturns and tend to migrate from class A into class B or C assets). Now come the trick bit, how do you find and assess who is a good syndicator?

    I would suggest deciding on a market with good economic fundamentals and then look for experienced syndicators within that market. I wrote this article to help with some other ways that you might qualify a suitable partner: https://www.biggerpockets.com/...

    Here are my thoughts on selecting a market: https://www.biggerpockets.com/...

    Good luck!

    [email protected]
    1Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Arnel Bueno

    There are definitely still some multi-unit investments that will cash flow in Colorado Springs. You just have to be patient and diligent in your search. A few questions:

    • Do you live in Colorado Springs?
    • If you live here, do you already own your primary residence or will this be your first real estate purchase?
    • If it's your first, are you looking to house hack this property? House hacking -- either with a rent-by-the-room model, short-term renting/Airbnb-ing a separate basement, or a traditional duplex/triplex/etc. house hack -- is a great entry into real estate.
    • Have you talked to a lender yet?

    Cash flow in Colorado Springs -- like everywhere along the front range -- is not like in the midwest. But it also has what the midwest does not -- great potential for appreciation over the next 15 years. 

    1Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @James Carlson

    Hi James,

    • -- Do you live in Colorado Springs?   Ans. Yes
    • -- If you live here, do you already own your primary residence or will this be your first real estate purchase? Ans.  I own my primary residence free and clear and no this is not my first real estate purchase.
    • --- If it's your first, are you looking to house hack this property? House hacking -- either with a rent-by-the-room model, short-term renting/Airbnb-ing a separate basement, or a traditional duplex/triplex/etc. house hack -- is a great entry into real estate.  Ans. Not really interested in house hacking.  Looking more into MF investments.
    • Have you talked to a lender yet? Ans. Yes 
    1Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Ronan Donnelly  Thanks Ronan for the tip.  

    1Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Bjorn Ahlblad  Congratulations and thanks for sharing your experience.

    0Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Loren Jacobs  Thanks Loren

    0Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Eric Johnson  Thanks Eric and I'm looking forward to hear from you soon. 

    0Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Michael Ealy  Thanks Michael. I definitely would like to be involved with MF but like you said the key is finding the right deal that makes sense with good cash flow.

    0Reply
  • James Carlson
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Arnel Bueno

    So this is purely an investment. It sounds like you have a more sophisticated understanding of the market than a total newb. So, it can be a little tough to find a good multi-unit in Colorado Springs, but it's not impossible. You're right that we've seen a ton of appreciation down here the last few years. Are we going to see that continue at the current rate? Probably not quite as crazy, but the number of people moving here and the current inventory (demand and supply) would say that you're not seeing a backslide any time soon either. We just bought a SFH home here and are prepping it for a rental. We buy for long-term hold. If we can squeeze some cash flow out of it right now, then we're happy to hold on to things and see how far this market will go in the next 15 years. Because all development and demographic trends look good.

    0Reply
  • Marlen Weber
    Specialist · Plano, TX · Member since 2020 · 2k+ posts · 861 votes
    6y

    @Arnel Bueno, Multi family is a great place to get started on real estate investment. Be sure to do your research on who you give your money, Good luck.

    0Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    6y

    @Arnel Bueno you are def not the only one in this situation. First off you can find deals in any market if your persistent and search long and hard enough. Secondly, I now have many investors that would prefer to invest in our multifamily deals because they didn't realize the time, hassle, and headaches it takes to run a 4-25 unit size deal. The few extra % they make doing their own deal typically gets washed out from the tax benefits of a large multifamily asset. It really all depends how much time you want to spend in real estate and what your goals are. 

    0Reply
  • Arnel Bueno
    OP
    Member since 2020 · 10 posts · 3 votes
    6y

    @Scott Morongell Thanks and I absolutely agree that one needs to be persistent to achieve a certain level of success in this business. My goal is to gain as much knowledge and experience as I can and do this thing full time in a year or two. I would like to know more about your projects. Whats a good way to reach you?

    0Reply
  • Scott Morongell
    Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes
    6y
    Originally posted by @Arnel Bueno:

    @Scott Morongell Thanks and I absolutely agree that one needs to be persistent to achieve a certain level of success in this business. My goal is to gain as much knowledge and experience as I can and do this thing full time in a year or two. I would like to know more about your projects. Whats a good way to reach you?

    I'll send you a DM

    0Reply
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