Good morning everyone,
What is the best way to find multi-unit property owners that are willing to provide seller financing? Thanks, Ross
The key really boils down to motivation. Banks with REO's will often times finance the purchase. But if you want all or most of the property financed, underperforming properties with a lot of equity are the key. You can do this by looking for apartments that don't look great and looking to contact the owner. Or using Listsource or DataQuick to find apartment owners with a lot of equity and do a mailing.
Thanks very much, Andrew. Do you think the MLS would be a waste of time?
You may want to look into a Master Lease Option strategy
a. find a mom and pop "poorly performing" apartment building
b. offer the low "NOI" as an option to purchase price
c. Get a 3 year lease with the option
d. exercise your option based on the low NOI
e. funding can be a JV, Limited Partnership or Bank Loan
f. you job is to turn around the investment, increase rents, make it more efficient.
The MLS will probably NOT be a waste of time. But it depends on your area. Ohio has several active investors here on BP that seem to be well. The MLS is great because the agent has already found the agent. The obvious disadvantage is that you'll be going up against another professional in the negotiations.
Use your easy sources first: MLS, local paper, friends and family. Then move onto the driving for dollars, mailings, etc. In my opinion, the key is to have a complete picture of the area you are looking to invest in.
Then look at each deal from several different angles. One is going to be a lousy rental, but great flip. The next may just be a dud no matter how you look at it. But stick with that dud. Months down the road it might turn into a great rental, or something else, because the price has been dropping the entire time.
Updated about 4 years ago
The MLS is great because the agent has already found the seller. Not The MLS is great because the agent has already found the agent.
Why not find a property you'd be interested in owning first, it doesn't have to be for sale or listed. Then inquire, then suggest seller financing. I have found that most owners of under 50 units are open to seller financing, they are in real estate, they are aware of the benefits and they usually know financing can be difficult for what they hold.
I'd say half the units in my area under a 24 unit complex are for sale, pretty much like most small motels, mom and pop drive-ins, small dinners, older storage facilities and car lots leased to used car dealers who go bust every 3 years.
Why are they not sold.....because there are no buyers at the price they want. Compromise, lower price and take interest income. If you can make it cash flow, give them 12% for 5 years, just don't pay too much or they will end up owning it again.
I don't think there is an app for what you're asking, you may need to use some shoe leather as horrible as that may sound, it works.
You can sure look for distressed properties and sales.....but another issue, if you don't have the money to buy, do you have the ability to repair, improve a complex, change it's reputation in the area, draw new tenants and make some trash pile profitable?
Multi family takes operating capital, money in reserve and to hold besides buying it. Regardless of how you get on the hook to take "control" of it. :)
@Bill Gulley, @Aaron Montague, @Brian Gibbons, @Andrew Syrios
Thank you guys so much for the great info!! I appreciate you taking the time out of your day to help out a newbie trying to find his way.
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