How to Buy Your First Multi Family Small Apartment Building

How to Buy Your First Multi Family Small Apartment Building

buy_your_first_small_multi_family_apartmentDiscover how to buy your first multi family small apartment building. You'll also learn the personal benefits of owning small multi family apartments, the investing advantages of going "small", how to find the best deals, why you should start with 5 plexes and NOT 4 plexes or below, and finally, 5 different ways to finance your first deal, including if you are short on cash or credit. This is an extremely powerful training that may have a lasting impact on your financial future. Here's how to buy your first multi family small apartment building:

 

How to Buy Your First Multi Family Small Apartment Building PodCast

Commercial_Property_Advisors_Podcast

Here is a summary of what you learned in the video above:

How to Buy Your First Multi Family Small Apartment Building

 

Personal Benefits of Small Multi-Family Apartments (1:27)

  • It is easier to wrap your mind around an 8 unit apt vs a 100 unit apt
  • A smaller apartment requires less equity
  • Easier creative financing
  • Single investor
  • Smaller property equals smaller mistakes

Investment Benefits:

  • Less competition
  • Less sophisticated
  • No large ownership approval
  • Higher cash-on-cash, IRR
  • Easier to wholesale

How to Create Your Own Deal Flow: (6:10)

Real Estate Agents

  • Ask yourself what you are looking for?
  • Look for 5-20 unit apartment with some sort of upside

Loopnet.com

  • Search for small apartment buildings in your areas

Make the Call

  • Call the agent and develop a relationship with them
  • You are not after the property you are after the relationship with agent

Thank the agent for their time, exchange information

Ultimate Goal

  • When the agent gets a deal they send it to you first
  • The best deals come from good relationships

Precision Direct Mail: (11:49)

  • Develop a list of property owners and periodically send them letters so that they call you when they have a property for sale
  • This is how you get the best deals

3 Unique Advantages:

  • No real estate agent involved
  • There is a perception that the deal is good because it is coming directly from the owner
  • Simpler to wholesale these deals because of perception that it is a better deal

 Keys (14:00)

Target absentee and out of state owners first

  • These type of owners tend to have problem with cashflow, repair issues, and property management
  • They are often mentally and spiritually detached from the property

Use a fresh list from a reliable source

  • It is a campaign
  • You must remain in the minds’ of property owners.
  • Send out your letter every 4-5 weeks, 3-5 times.

Why Start with 5 Unit Apartments not 4 (16:30)

4 unit apartments

  • Considered a residential property
  • Its value is constrained by the sales comps in the area

5 unit apartments

  • Considered commercial property
  • Its value is based off sales comps AND NOI
  • NOI is your income minus your expenses
  • As NOI goes up your property value goes up
  • Value equals NOI increase divided by your Cap rate

Financing Your First Small Multi-Family Apartment Deal (21:33)

Conventional Financing

Take loan package to a local bank or loan broker

  • Local bank:
    Salary person
    They submit your loan package to a board for approval or denial

 

  • Loan Broker:
    Works off of commission
    Submits your loan package to 20 or more lenders to find financing

 

  Creative Financing

  •    Seller financing
    The seller becomes the bank for you and finances the loan

 

  • Seller-carry
    The lender might require 25% down that you do not have so the seller carries a second loan to cover what you do not have

 

  • Master lease
    You do not need a lot of experience or cash down
    Do not have to go through a bank
    I have a 20 minute video about “Master Leases” here

 

  • Wholesale
    A great way to make money if you do not have a lot of funds or experience
    Find a great deal, get it under contract, then assign the contract to an investor buyer for a fee
    You collect the fee at the closing and the investor buyer takes over ownership

Comments

  1. Mike Holly says:

    Peter,
    About half-way thru our Commercial Real Estate Investing for Dummies book and just finished your video above ( how to buy your first multi-family small apartment building. Thanks for the info. Keep it up !
    Mike

  2. Dennis Shinn says:

    I really appreciate all the info you give out. You are one of my favorite youtube mentors. Thanks for the new videos

  3. Peter, im excited about becoming a commercial real estate investor of multi-unit apartment buildings i have read the entire book commercial real estate investing for dummies, this week i will be getting stated on your next book that i recently purchased the apartment consultant just want to say thanks for all this information and motivation that you provide.

  4. Adriana Gatti says:

    Your videos make things look very easy!!! Im so excited.

  5. Thanks Peter! Your a great inspiration!

  6. Mr. Harris, thank you for providing opportunity information. I’m at the beginning side of REI, and this is the first of your training videos I listened to.

  7. Peter thanks so much for all the great information you share. I have learn so much from your video on commercial real estate. I have your book which have given me so much on commercial real estate. Thank you so much and keep up the wonderful videos

  8. Michael B says:

    Hi Mr. Harris,
    I’m 22 yrs. old and currently reside in Houston, TX. I’ve been watching your videos for a few weeks now & I’ve learned so much from you already. My girlfriend and I are getting ready to build some four-plexus in the Houston area, but my real dream is to own a 40+ unit apartment complex within two years from today. I hope to continue learning from you. Thank you for taking the time out to educate people on how to achieve financial freedom! You are a blessing to many.
    God Bless,
    Michael

  9. I would like to know about your system it sounds interesting sounds so successful after reading the testimonials I would like to learn how to participate in your plan

  10. Peter,

    Where’s all the successful outcomes at. I would like to see someone say, I purchased these units using your systems.

    Best Regards,
    Wayne

  11. dave Cali says:

    Great video Peter. Thanks

  12. Yola Magloire says:

    Mr. Harris, thank you for sharing your knowledge and expertise.
    “A teacher plants the seed of knowledge, sprinkles them with love
    and patiently waiting to reap a valuable harvest of blessings”

  13. Mr. Harris, thank you for sharing your knowledge and expertise.

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