Apartments are an ideal asset class for beginners to get started in commercial real estate. You’re about to discover why starting your commercial real estate investing career in Apartments is such a good idea, 7 things to look out for when apartment investing and 3 areas beginning investors go wrong. Plus, you’ll here the story of Peter Harris’ first apartment deal that helped him officially escape the rat race. And finally, you’ll get an action plan on how you can get started right now investing in apartments. Here’s a very detailed training on Apartment Investing for Beginners.
Here is a summary of what you learned in the video above:
Apartment Investing For Beginners
Why Starting out with Apartments is a Good Thing (1:01)
Demand
- For apartments is huge and will continue to be huge
- Jay Thomas Black “Echo Boomers” 18-34 years will propel apartment demand
Availability
- More Apartment buildings then office buildings or shopping plazas
Ability to Understand
- Simple Leases
- Easier compared to office buildings or shopping centers
Loans Readily Available
- Lenders love apartment lending
- Income stream is steady and consistent
7 Things to Look for When Investing in Apartments (4:11)
Have a goal
- Why are you buying this apartment building
Area/Location
- If a location is declining there will be a negative stigma to the apartment
- If there are no jobs there will be no tenants
- Call local property management company and ask how the job market is
- Go to your city’s Chamber of Commerce and ask the same question
The Property
- What is the property’s condition
- Know what you are walking into
- Look at the exterior and the interior
- In beginning stay away from major rehabs
The Numbers
- Over the last 12 months make sure the property’s income exceeds the expenses
- Get the numbers in writing
- Do not use the broker’s brochure
Management Strategy
- Are you planning on managing yourself or hiring a management company?
Exit Strategy
- Holding Longterm
- Flipping
- Refinance with lower rate
- Refinance cash out
- Holding Longterm
- Flipping
- Refinance with lower rate
- Refinance cash out
Ask Tough Questions
- Take out the emotions
- Do not fall in love with the property fall in love with the deal
The Three Areas Most Beginning Investors Go Wrong (10:53)
They tend to believe their property financials based off the brochures
- The numbers in the brochure are misleading
- Get the numbers from the seller
They underestimate the expenses of the property
- A property is like a body, it needs to be maintained
- Get expert advice from a mentor
- The expenses often equal 50% of the income
Property Management Oversight
- Proper mindset,”If you have a steel suitcase full of 100,000 $1 bills, you get busy and need someone else to look over the suitcase. How careful would you be on who you hire to look over your suitcase?
- Have the same mindset when finding a property manager
Perfect Deal: (15:55)
- A perfect deal does not exist
- Be smart, start small, get started, start practicing.
- Do not look for the perfect deal
Breakdown of My Very First Apartment Deal (16:32)
- 45 units
- Asking Price of 775k
- Purchase price of 720k
Location: Next to a major university with a medical school. Next to corridors where lots of grad students and university workers worked
Financed: Went into the president of the bank’s office and explained why he should finance me. Took lots of tries but persistence paid off
Put down 20%
Cashback: I found a lot of flaws that equaled 50,000 worth of work.
Received cashback of $40,000 to help cover the repairs
Cashflow: $6500 a month
Action Plan for Getting Started: (21:15)
Get educated, absorb as much information as you can
Find a friendly broker who specializes in apartments
- Nurture this relationship by being friendly and communicating often
You want them to think of you when they receive pocket listings
Start visiting apartments that are for sale
- See the difference between the brochure and what you see
Get your financing in order
- Do you have the cash available or not?
- Commit to a financing direction
Create a relationship with a local property manager
- Ask questions
- They can do driveby inspections on properties
- They can do the walkthroughs with you to evaluate the property
Get your mindset right
- You can do anything you set your mind to
- Believe in yourself
Do not give up
- It will take time to find deals
- One brick at a time
I want to get started in small apartment investing and looking for help. I looking for some coaching and people that would be willing to partner with me to help me get started. Can you guide me in the right directions?
Apply to be my next Protege
I am ready eager and able. Let’s begin.
It’s good to know that flipping is a viable exit strategy when it comes to apartment investing. I’m considering to start investing in real estate properties soon because I just realized how much commitment is needed to make it work. Starting early would definitely be the smart way to do it so that I could enjoy its benefits later in life when I already have a family.
How can I get mentorship to start investing?
You can start the process by applying here: Protege Program.
Thank you for an excellent video. I am definitely ready to own an apartment building right now. I hope that I can get some additional advice from you if necessary.
Hi mr Peter my name Jose Hernandez and I’m a real estate agent, I’m very interested in commercial real estate investment and would like to know if you a training where I can meet you and get to help to start, I really need a mentor like you, thank you for all you video, they are very interesting…
If you haven’t already, you can enroll in my free online course: Commercial Real Estate Investing for Beginners. You can also apply for my Protégé Program.
Please send me more information about the this.new in real estate investor would like to work with you.on some deals
You can start by enrolling in my free course: Commercial Real Estate Investing for Beginners. You can also begin the process of applying for my Protege Program here.
Mr. Peter
Would you please let me know if you have a training manual on you program for beginners, if you do please let me know how much is the cost plus s/h please. Do you any other manuals for sale please let me know. Thank you.
You can get a copy of my free book Commercial Real Estate for Beginners if you don’t already have it, and also enroll in my free course Commercial Real Estate Investing for Beginners.
My name is Cynthia Thomas, & I will be retiring soon, looking for an educational video such as this to decide where to start with apartment investing. Very enlightening, clear, direct info. Thank you.
Simple, straightforward, well-organized, and easy to understand presentation! Thank you.
I’m rarin’ to do my first deal, but, have to “wet my feet” before I’ll go “all in”. Have to do my homework first, as you have clearly outlined them here. I’m giving myself a couple of months to get started.
The best and most understood concept is “where to invest when looking into apartments”.
There are many factors involved in investing especially in apartment complexes.
Very informative.
Hello Peter,
This was great info for a beginner. My wife and I always talk about investing in apts and self storage units. You have gently given me a push to START with your simple instructions. As I look back over my life, I’ve had plenty of money to come thru my hands, I just didn’t have a mentor to guide me.
Thanks much!!
My name is cookie thompson I live here in in Arizona I’m originally from California San Diego my question is for you today I have bad personal credit I would like to wholesale for right now for investing in properties for apartments can I get Corporation for an LLC to work up under.
I have a question, is there an escrow account for repairs that comes with the purchase of apartments buildings?
An escrow account can be created, but it doesn’t happen automatically.
I love your videos and I hope to be your student soon.
In this video i dont get why is nice to have cashback if you have to pay 20% of down payment…
Im sorry, but if you have to pay..what is the diferrence to get it back?
Thank you
Reducing your net down payment by getting cash back is better than not.
Probably because the bank required 20% down of the full purchase price to get financing for the property. The cash back is from the sellers end of the deal after the sale is finalized. Even if the seller reduced the price of the property by $45,000.00 the bank would’ve still required the full 20% down on the full purchase price. 20% of $45,000.00 is $9,000.00 so it’s better to get cash back and get the full $45,000.00 at closing and walk away with the extra $9,000.00 that could be used towards down money on another property.
Good afternoon Peter,
I have a couple of relationship that I have being cultivating for the pass 3 years. One is with a Regional property manager for a commercial Real estate CO. She has been working with this company for over 17 years; Next is My wife uncle who has been a Real estate Broker for over 30 years; then, there is Dan, a contract lawyer who has worked deals for Donal trump in LA, who happen to be the one who did my will; and lastly a group of professionals who dont know anything about investing in real estate at all. The problem is how to over come their insecurities, by convince them of the advantages of doing business with us and the benefits of it.
These individuals are set in there ways and they would like to see something solid and not a bunch of sweet talk. They want to see specific pieces of the investment propocition, toguether with a business plan.
I’m very short on cash and my credit is bad, but I have the dicipline to go and get it. I know that without the guidance of someone like yourself, I will make mistakes and probably get in trouble with these individuals due to my mistakes. Would you help?
Nazareth
Sir,
I would like to begin investing in apartments to subsidize my retirement once I retire in 5-6 years. It seems like a scary step and I need much encouragement and advice. I do not have a lot of money but I am motivated. I just watched your video online and would like to continue my enthusiasm so it doesn’t fizzle. Can you help me. Thanks
I have been investing for 30 years in commercial real estate- I enjoy your clear direction and presentation style- wow refreshing!
Jeff Hurwiz
Interested in more information about becoming your protégé
Love your presentation,this is what i have been looking for. I need a mentor i believe that i will make a good student.