Small Apartment Investing
Hello BP Friends,
I'm a new multifamily investor in the Atlanta MSA. I started my real estate investing journey in SFH a few years back and now making the switch to multifamily. In today's market, I find that there is a lot of competition in this space and the deals are harder to come by.
Question...Is anyone investing in small apartment buildings? If so, how did you find your first deal and how did you finance it?
Thanks in advance!
- Kevin
Quote from @Kevin Barnett:
Hello BP Friends,
I'm a new multifamily investor in the Atlanta MSA. I started my real estate investing journey in SFH a few years back and now making the switch to multifamily. In today's market, I find that there is a lot of competition in this space and the deals are harder to come by.
Question...Is anyone investing in small apartment buildings? If so, how did you find your first deal and how did you finance it?
Thanks in advance!
- Kevin
As you've stated, it's very competitive. In my town, we typically see a couple multi-family properties on the market per year. I don't remember seeing a four-plex for sale in the past 18 months. One came on the market two days ago and there are at least a dozen investors competing for it.
It won't improve any time soon, barring a major change in the market. What you can do is learn how to find off-market deals. This includes driving for dollars, cold calling, direct mail marketing. Search those terms and start learning.
Happy to help...how many units did you have in mind? What part of the city?
@Kevin Barnett I found one of my first multi unit deals by just driving around my target areas and saw a "FSBO" sign in the window of a half-renovated vacant 5 unit. After a lot of calling around to big banks, I quickly found out if it's not livable, the big banks (Chase, BofA) won't touch it.
I got a lead with a small local bank in the area that was familiar with the property. They ended up providing purchase + Rehab financing based off the ARV of the building once fully finished and rented. The funds were a "draw system", basically fix it up in stages and get it inspected, and I would be reimbursed after.
The load turned into a regular commercial mortgage after completed (because it was 5+ units). 5% interest at the time, fixed for 5 years and then floating with prime, 20 year term. No two sets of closings and fees (common if you use HML and then refinance after), and 0 points as well. Doesn't report to personal credit which is nice.
I've since found a number of deals the same way (although scouring CL, Facebook, MLS I also do). Funded many the same way to.
Hope that helps and good luck!
- Tom