Thoughts on looking for a JV partner in Missouri

[Nathan Alton]

My colleague and I are exploring our options for a 6 unit apartment building in the Kansas city area.  It's listed at $125k and it grosses $2,550.  We are looking for someone to come in with us with there own terms or even a private lender.  It's too good of a deal to pass up and we are exploring options other then seller financing.

[Jim Genis]

@Nathan Alton, welcome to the forums.

A 6-unit apartment building is now a commercial deal, not residential. As such, the sources for lenders -- and accompanying requirements -- are different. The primary focus is on the asset and the operator. However, many of the principles from residential investing apply here: location, quality of the asset, quality of the borrower, rent rolls (leases), quality of the tenants, experience of the property manager, etc.

I'd recommend you search the forums and podcasts for information on commercial deals and how to manage them. Also check the podcasts from @Mike D'Arrigo's company, Pinnacle. You may get some insights there as well.

Don't underestimate the value of a great property manager for a deal like this. If it's cheap, it may be an area that requires a manager with special skills. "Doing it Yourself" may not be the best choice.

I think you're wise to look at a JV option; it spreads your risk and you'll learn a ton from an experienced partner. Don't be greedy for the dollar spread; the knowledge you can gain will be invaluable groundwork for a successful long-term investing career.

As they say in commercial real estate lending: "A good operator can save a bad deal; a bad operator can kill a good deal."

Best of luck!