How can I raise the funds for multifamily

Question

I'm a newbie real estate investor. I see this huge opportunity in my neighborhood, a multifamily house with  6 appertments each can generate at least 2500 thousand dollars or maybe more then that  and the total building is listed for 1.51million dollars. Is there any way I can raise that much money for this building? Your help will be very appreciated. Thank you.

Jaysen Medhurst · Answer

@Itteahad Zihan, for a $1.5MM property you'll have to come up with 25% down payment (~$375k), + 6 months of reserves, + closing costs, + any necessary renovation costs. You're looking at $400k+ without blinking.

The real question is if this is a good deal. You have to run your numbers and understand the valuation of commercial properties to figure that out. If it looks good, I recommend finding an experienced investor and bringing them the deal with the understanding that he'll let you shadow him throughout the process.

The chances that you'll be able to raise $400-500k and get a bank to lend you $1.125MM when you have no experience is Zero. I'm not trying to be discouraging, I applaud your ambition, but you have to be realistic about what you can pull together with no track record.

Mark Burlison · Answer

Look for a much smaller deal to start! 😀

Alina Trigub · Answer

@Itteahad Zihan

I'm assuming you have run the numbers and know for a fact that it be mutually beneficial for you and your investors.  In terms of raising funds, if this is your first time doing it, it will be challenging to raise funds without having a track record from total strangers. So you need to have one of the following:

1) your existing network of contacts that will be willing to join you on it

2) a proven track record

3) if you don't have #2, then need to find an experienced investor to partner up with to leverage their track record to raise funds from investors

In addition, keep in mind depending on what structure you will plan to use for your investment - you may end up with either all active and/or some passive investors in your deal. This will entail that you might be selling a security and may need to hire a securities attorney help you by drafting the legal paperwork. This process is much more involved and costlier. Hence it will require you to make a decision whether it still makes sense to move forward.

Tony L. · Answer

Hey Itteahad,

You don't necessarily have to raise the full $1.51 million. With leverage you only need to raise 25% + few % for closing and fees in order to take down the property.

I see you're located in NY, if you're ever in manhattan I am in an REI meetup in midtown that discusses Multifamily every week. Might be a good place to run some of your ideas/numbers by others.

How can I raise the funds for multifamily

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