Getting ready to buy my first small multi-family

Getting ready to buy my first small multi-family

Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes

Hello,

I am generally a lurker, and I find posting on forums very intimidating. I usually listen to the BP podcasts and I love reading about real estate and financial independence. But I am gearing up for my first multi-family property purchase and wanted to reach out to people who have much more wisdom and insight than I!

I am currently in the process of selling my first rental (a condo) for a tidy profit. I bought the condo three years ago, lived there for two, and rented it out for the last year. I am selling now to take advantage of not paying cap gains (and I dislike knowing that assessments are coming that I don't have control over). I should have enough to roll that money up to a small multi-family around my area (hopefully around Tacoma WA). 

And I am terrified. AHHHH! But also really excited about accelerating my investing career. 

I have a ton of questions and here are a few:

1.) What is the best resource you found when you first started out?

2.) Should I find a commercial or traditional lender now? What information do they need from an investor? Do I need to have a deal in hand or do they give a 'preapproval'? (I think I can go the conventional route at least for the first one/first few)

3.) For the western WA investors out there - what events/groups have you found most useful? What memberships are worth the cost? I would like to meet others in the area, but went to a few duds that were a sales push...

4.) For the western WA investors in the Tacoma area - do you have a recommendation for a real estate broker or amazing agent that knows the investment landscape in and around Tacoma?

Thank you in advance for any advice!!

Heather

4Reply
105 views

Most Popular Reply

Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes
9y

Hey Heather, there are a few of the resources that have really helped me out since I got back in the area. The Residential Housing Authority has free monthly meetings in several counties. Here is a link  http://web.rhawa.org/event

Also, the Fixated on Real Estate Meetup is great. And I sometimes go to the courthouse in Tacoma on Friday mornings to do some networking with lenders, buyers, etc., at the tax foreclosure auction. You probably won't find much in the way of multi-family's, but it's a great way to get more involved in real estate as a whole. No sales pitches in any of these!

I know some great brokers down in Tacoma and I'll have my license in the next week or two as well. Let me know if I can be of some help :)

See this reply in the discussion

20 Replies

Jump to latestLatest
  • Investor · Vallejo, CA · Member since 2016 · 42 posts · 19 votes
    9y

    @Heather R. Welcome to BP!

    1) Finding a great, knowledgeable lender. Big shout out to @Chris Mason for all of your help!

    2) You do not need a commercial lender (assuming you're buying a building with under 5 units). You should get pre-approved first. This way you know what you can and cannot afford and don't waste your time looking at properties that are out of your reach. For this part you do not need to have a deal in hand.

    When we were putting in offers, we would get a pre-approval letter that was tailored to that offer.


    Are you planning on house hacking?

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Account Closed Thanks!

    I will seek a pre-approval letter then!

    I am not planning to house hack; I live in Seattle and cannot afford a multi-family here. I need to search outside my area for a good place to invest :)

    Thank you for the advice!

  • Investor · Seattle, WA · Member since 2017 · 19 posts · 8 votes
    9y
    I'm in a similar position, bought a townhome in north Seattle 3 years ago, lived in and am now renting for cashflow (see my other post for full details) i would be interested in connecting to discuss and share networks
  • Real Estate Investor · Minneapolis, MN · Member since 2013 · 9 posts · 4 votes
    9y

    Conventional Lenders (less than 5 units) will provide a pre-approval and many agents that only sometimes deal with multis-request/require it because they don't know any better and it is common with an owner occupied.

    Commercial lenders likely won't get a 'traditional' pre-approval letter because they focus more on the property than the borrower; so difficult to give a general pre-approval letter.

    If you are wanting to hold in a business entity, you need a commercial lender. Conventional guidelines won't allow a business entity to hold title.

    Conventional will provide lower interest rate and longer amortization options (30 years), but usually at the cost of a higher down payment. FHLMC/FNMA require 25% down, no more than 2% seller paids. You also need to personally qualify for the payments and none of the current income from the property can be used (less than 2 years history on your taxes).

    Commercial will be a higher interest rate (usually not significantly .25-.5%), shorter amortization (20-25 years) but don't have to conform to investor guidelines as they are often bank held/portfolio loans. You will likely only need to personally guarantee the loan, but repayment will be more based on the property income. If held in a business entity, it also will not be on your personal credit report.

    In the end, there isn't a right or wrong loan, just one that fits your needs and cash flow.

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Kevin Terpening Thank you! This is very helpful - I will look into both. If I get a commercial loan, can I use the one loan toward multiple properties?

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Alex Lucille Feel free to PM me if you want to meet up for coffee!

  • Real Estate Agent · Bellingham, WA · Member since 2017 · 427 posts · 182 votes
    9y

    @Heather R. @Alex Lucille The market down there is all so expensive. Do you see any good deals in the area? Have you given any thought to looking further north toward Everett and Marysville?

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Robert Freeborn I have definitely considered Everett and Marysville but they are also getting quite expensive (but I am keeping an eye out there as well). I haven't seen any good deals in Seattle, but then again I have only been searching the MLS.

  • Real Estate Agent · Bellingham, WA · Member since 2017 · 427 posts · 182 votes
    9y

    Everett and Marysville are more expensive than tacoma? I'm honestly shocked.

  • Real Estate Investor · Minneapolis, MN · Member since 2013 · 9 posts · 4 votes
    9y

    Some commercial lenders may allow one loan for multiple properties, but doing so can get sticky with stacked collateral.

    In general, the fees won't differ much whether one loan or multiple. Origination charge being an example, but 1% on one property at $500k versus 1% on two properties at $250k/each...

    You still need separate appraisals, title work, filing fees (state/county/city) so trying to find a lender to bundle properties into a single loan likely won't fare you any better than just finding a good lender.

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Kevin Terpening Ah makes sense! Thank you!

  • Rental Property Investor · Cleveland, OH · Member since 2016 · 653 posts · 769 votes
    9y

    Hey Heather, there are a few of the resources that have really helped me out since I got back in the area. The Residential Housing Authority has free monthly meetings in several counties. Here is a link  http://web.rhawa.org/event

    Also, the Fixated on Real Estate Meetup is great. And I sometimes go to the courthouse in Tacoma on Friday mornings to do some networking with lenders, buyers, etc., at the tax foreclosure auction. You probably won't find much in the way of multi-family's, but it's a great way to get more involved in real estate as a whole. No sales pitches in any of these!

    I know some great brokers down in Tacoma and I'll have my license in the next week or two as well. Let me know if I can be of some help :)

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Ryan Evans

    Hi Ryan - thanks for the tips! I will check them out for sure! 

    I actually listened to the podcast with Tarl Yarber recently (great episode!) and was especially interested because he is local (and who could forget a name like Tarl ;)

    If you could point me in the right direction toward a good broker, I would be grateful! 

  • Investor · Wichita, KS · Member since 2016 · 133 posts · 63 votes
    9y

    Fixated on Real Estate is great. Also check out Cascadia Investors Alliance as we have a free monthly meeting in Lakewood, Seattle and I think they have on in Marysville now as well. On the broker side, let me know if there's anything I can do to help you reach your goals!  

  • Real Estate Agent · Puyallup, WA · Member since 2012 · 240 posts · 95 votes
    9y

    @Heather R.

    You should connect with @Aaron Nelson as a broker. He is amazing at finding profitable Flips/BRRRR's...

  • Yelm, WA · Member since 2017 · 120 posts · 84 votes
    9y

    Heather, it sounds like we have the same goals and questions! My target area is also Tacoma (live in Yelm), we should connect! I'm a newbie (one sfh (buy and hold)  just finished big renovation and I learned a LOT, along with blood, sweat, and tears), and really looking to connect with people to share ideas and knowledge!

  • Investor · Seattle, WA · Member since 2014 · 58 posts · 15 votes
    9y

    @Wendy Carpenter Sounds great! I will PM you to talk about when and where!

  • Residential Real Estate Broker · Tacoma, WA · Member since 2017 · 18 posts · 8 votes
    9y

    Hi @Heather R. and @Wendy Carpenter

    I'd love to meet up for coffee. I'm a broker in Tacoma and find it rare to connect with women in this space. My husband and I have purchased 4 investment properties in Tacoma...not an expert by any means but have learned a lot through the experience and we are also looking to broaden our portfolio specifically in Tacoma.  :)

  • Yelm, WA · Member since 2017 · 120 posts · 84 votes
    9y

    @Ruthy Taylor, that would be WONDERFUL! @Heather R. and I were trying to get something set up! I'll message you!

  • Residential Real Estate Broker · Seattle, WA · Member since 2016 · 14 posts · 4 votes
    9y
    Hi @Heather R and welcome to the forums! I am an agent helping clients in Tacoma and in Everett. Also looking into those markets for my own investments. I have been able to find a number of multifamily properties in both the north end and the south end for my clients that pencil really well. I'd love to grab a coffee and help you find a great starter investment. Send me a PM. -Tony Houts Soundpoint Real Estate
Join the conversationCreate a free account to reply, vote on answers and follow this thread.