Big multi family investors

[Colby Miles]

This is my first post so i would like to introduce myself. My name is CJ miles. I'm currently 30 years old. I wasted most my youth goofing around when i should have been investing in real estate. I am currently serving in the US ARMY but i do wedding photography on the side.

I was reading a couple books by Ken McElroy. Which im sure most of you have. Now i have a question as far as aquirering investors, how exactly do i find the rich people to help me with my down payment on a mortgage. I have pretty good credit (800+) and $30,000 in the bank that i would like to use in funding my due dilligence and other expenses when searching for the right medium sizes apartment building. I am thinking 12 - 30 ish units to start out with. I found some properties on loopnet ranging in the 10 - 15% cap rate. That is an incredible deal and 100% occupied at that. My other question is how do i go about verifying the cap rate.

Thanks in advance,
CJ Miles

[Joel Owens]

5 + or more units is more based on the property than credit but it does help.

On an apartment building 5+ units you will spend about 8k to 10k total for appraisal, site inspection, environmental, survey, cost reserve stable, closing costs, title search and policy etc.

I can almost guarantee on LoopNet those properties that say 10 to 15% is inaccurate. I could go in and tear the numbers apart. I see maybe 2 out of 10 properties on LoopNet that have close to accurate looking projections and the rest is junk.

Sounds like with only 30k you are trying to bite off a little too much jumping into a bigger apartment building. A good strategy might be pooling other friends funds together from the military and buying a larger property with a pool of investors. This needs to be people you already know which I am sure you have a network of people.

For instance if you have 30k, someone else has 100k, and someone else has 80k then take 10k off the top going in for research and closing costs. Now you have 200k and set aside 20k for reserves of the building.

You have 180k to invest as a pool.

If you get a 75% LTV you can afford a 1.2 million dollar property putting 15% down and having the seller carry a 10% second mortgage.

At 40k per door acquisition you can afford a 30 unit complex. You would have an attorney draft an operating agreement and exit provisions and equity provisions and cash flow payouts subject to the percentage invested per person. If you were going to manage it you then include an agreed upon fee for yourself.

The attorney will cost about 5k.

I would try this avenue first or scale down your deal size to do on your own.