Where do you find apartment buildings?

Question

I'm a new RE investor living in LA, but I have family in Michigan and am looking to invest in a small apartment building there. Since I can't just drive around looking for likely places, I was wondering if there's a good online tool I can use to get started looking for these types of buildings. I found LoopNet.com, but are there others? Eventually, I'll likely connect with a realtor to find a property, but I'm just getting started and want to know the kinds of things that are out there.

One final question: this would be my first investment property. Is it crazy to start with an apartment building? They just seem more stable and a quick way to own many doors instead of one-at-a-timing it.

Any advice for things you should know in this arena would be appreciated!

One final question: this would be my first investment property.  Is it crazy to start with an apartment building?  They just seem more stable and a quick way to own many doors instead of one-at-a-timing it.

Any advice for things you should know in this arena would be appreciated!

Account Closed · Answer

In my experience (speaking in generalizations here), most 1-3 unit buildings will be on the MLS. 4 units buildings are usually on the MLS too, but trade by word of mouth a bit more often than 1-3 unit buildings. 5-9 unit buildings usually pass between people who know each other and who are local. 10+ buildings usually get listed with apartment brokers and are very competitive. It's quite hard to track down 4-9 unit building deals since (i) there aren't that many of them, (ii) usually owned by smaller groups of people who tend to know each other (i.e. a handful of landlords in each area who know to call each other if they want to sell), and (iii) get sold without much, if any, publicity.

Good luck! No one will be able to show you 1 way to find 50 of those deals, but they will be able to show you 50 ways to find 1 deal!

Mike Alber · Answer

@Bill O'Donnell

Thanks for the suggestions!  I'll definitely check those sites out.  As you say, a commercial RE agent is probably my best bet, but I'm not quite there yet and don't want to waste anyone's time.  I'd LOVE the experience of a 4plex -- the friendlier loan terms along would be worth it -- but I just can't seem to make the numbers work in LA and can't move due to my job.

As for the commercial loan, I'm not too scared by a higher percentage down, but the idea of having to pay a big balloon payment after 7-10 years is a little frightening.

Bill O'Donnell · Answer

@Mike Alber

Check out the websites of commercial realtors like Marcus and Millichap...

Century 21 commercial..

Or speak to a commercial real estate agent...

Some newbies don't realize that above 4 units most apartment buildings are commercial.

Consider that commercial loans usually have a higher rate,and often require more down.

You can start big,but be sure to do your homework. Buy right, run the numbers then run them again with a less rosy outlook...

A 4plex, with a conventional mortgage, that you live in for 2 years is a great education tool to consider....

Mike Alber · Answer

(Really sorry, I think I posted this in the wrong spot!  Any way to move it?)