How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Realtor Listed Apartment Buildings
A listed apartment building is simply any multifamily property whose owner has decided to sign a listing agreement with a licensed real estate agent. Most listings for apartment buildings will be held by a commercial realtor who has experience multifamily with properties. This can work to the buyer’s advantage because the listing agent will be familiar with the analysis that goes into buying a multifamily property. The buyer should always be aware, however, that the listing agent only has a fiduciary responsibility to the seller with whom he or she has a signed listing agreement. This means that all facts and figures on the financial should be verified as best as possible. Don’t take the seller’s real estate agent’s word for anything. Check and double check the facts first before you make any decision to buy.
It is also important to remember that right now the market for multifamily properties is hot. With a listed apartment building your offer and interests will be competing with more buyers. This can potentially increase the price beyond profitability. Just because there are 15 other buyers willing to pay a certain price for the building does not mean that the property is worth that much. Apartment building investors need to have a clear method for analyzing a property’s profitability. If the building doesn’t meet your criteria or your goals the most profitable thing to do is to walk away.
Unlisted Apartment Buildings
Unlisted apartment buildings are any multifamily building that is for sale but not listed on the multiple listing service or with any realtor. Unlisted multifamily buildings offer both potential risks and rewards. The risks with an unlisted building include not being able to have access to all of the necessary records and information on the property. You many not have very accurate financial information for your property analysis. This will require you to do more due diligence of the property. You may also encounter owners of these buildings who have unrealistic expectations of the price they should receive when selling the property. This can be because the owner hasn’t raised rents to the market level while he is comparing his property’s sales price for the price that similar buildings. What these sellers fail to realize is that apartment building values are determined by the net cash flow on the building which is directly influenced by the gross rents. Therefore, a building with below market rents will not be valued as highly as the building that does receive market rents.
Photo Credit: Joe Gatling