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Updated over 7 years ago, 05/22/2017
Best place to buy a large apartment building?
Hello all, after doing tons of research. Close to buying a 3-unit family and then backing out because I did not feel the cashflow amount was worth it. I was thinking about going bigger after watching a bunch of youtube videos. Is it crazy for a beginner like myself to want to invest in a apartment complex say with 10+ units? Also any advice where the best place to invest in something like this would be? If I sell my house I would have about $100,000 in capital to invest in RE with.
@Eric DeVito I am in a ditto boat. Literally confused over many options. I am from Jersey City and want to buy a multi in some areas around hudson or Brooklyn. If you are up for it we can discuss over phone and may be partner on some of these deals.
@Eric DeVito and @Donnie Patel I think you are both on the right track. I've bought some smaller multi-family places and a couple SFHs. They just aren't worth the headache of procuring financing and doing due diligence when you may only be netting $100/mo. I've been looking as well and have participated in some syndication deals.
If you are looking for more education I recommend Anthony Chara of www.successclasses.com. His workshops are filled with a ton of useful and usable content.
Real estate is a great way to get rich slowly. Yes larger properties to a point are less work on a per unit basis but usually the yield is lower/ROE as unit count increases. I would focus on smaller properties/SFH especially as a beginner before trying to do something big.
@Joshua Fulenwider Right. This is what I am pretty much coming to realize. I understand as a newbie investor many people say start small and all this. I have come to the realization that as you said I just don't see how it is worth it. I was driving 90 mins back and forth looking at property that will only give me 100-200 month cashflow. Personally that is nothing. I would need a lot of those type of properties to see a decent income each month overall. I feel like taking risk and aiming high is worth a shot.
@Stan Sugarman You make valid points and I cannot argue that. My mind is all over the place. I know experience is very important in terms of investing in RE. I just feel like aiming high I suppose.
Hi @Eric DeVito,
Welcome to BP!
Working with $100K sounds like you should be leveraging your equity against debt mortgages on buying multiple multi family units. Check out Philadelphia and Pittsburgh, they would be a easier buy in for 3-10 units with $100K based on the current appreciating markets within a close distance from where you reside.
Let me know if you have any questions.
Regards,
Joe Scorese
- Joseph Scorese
@Eric DeVito Eric I have assisted hundreds of investors buying in Pittsburgh. let me know if you have any specific questions on where to buy, what to buy and help with running any of the rent evaluations, vacancy rates and other research. You can PM me if you like also.
best of luck to you
@Joseph Scorese Thanks for the reply. Now can you break down what you said in easier terms. Mainly on what exactly do you mean by leverage on debt mortgages.
@Alex Deacon Yes that would be great. I would like all the knowledge you can give. Also what areas are best to look into for apartment complexes?
@Eric DeVito Hi Eric, I agree with @Joseph Scorese in checking out the Pittsburgh PA market. You will get more "bang for your buck" so to speak by researching markets where you can buy in at a lower rate with excellent returns on your investment. I have lived in Pittsburgh my whole life and know the market and area well and can certainly make recommendations.....Gary
@Eric DeVito Send me a Private message and I can send you a large attachment with information about Pittsburgh and the neighborhoods
@Gary Swank that would be great. I would like all the knowledge you can give me. Thank you.
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You don't know your limit for success; so, don't worry over it...you may handle bigger just fine. And if you happen to screw up and fail, you learn and grow. Think as big as you can and take action that will achieve those thoughts. Figure out your goal and the path to get there becomes more clear. $100/mo works for some goals and not others. Many seasoned investors say their largest regret is not going bigger or faster sooner. Good luck.
@Eric DeVito and @Donnie Patel I was born in NY and raised in Newark Nj. I know how you guys feel and there's so many ways to be able to obtain apartment buildings.
Years ago I almost closed on a 30 plus unit via a Master Lease Option. There's a lot of knowledge here on BP. Check out the podcasts they are helpful but if you would like to connect just send me a PM.
Maybe it's just me. Large apartment buildings are 500+ units. Medium are 100 - 499. Everything else is small. Under 5 isn't multifamily in my book, because you finance as a 1-4 family residential with 1 loan. I am in the small/micro MF market at 16 - 50 units.
As for the best place to buy, I'd suggest something local.. .within an hour or so of where you live. As a beginner, I would not suggest buying remote. But that's up for debate. FWIW, $100K doesn't go far with large apartment purchases. My 2 cents.
Saying to only look for large multifamily locally will severely limit your potential deals.
@Anthony Gayden maybe. But read the OP post again. Are you advocating that this guy, who is selling his house, and an admitted newbie, to not buy something local? Good luck to him if he does. It's not that he can't, it's just my opinion that (see the topic) the "best place to buy" is a place that you know best.
@Chris Martin I understand what your saying and I have been through the forums for a while now. I was looking at 3-4 family units within an hour drive from me but I don't feel the returns is worth it. I bought a SFH home using the VA Loan and I got a great deal. I am hitting the two year period shortly on this house so I want to sell because I got an apprasial and can make a nice turn around on the house. I also have to wait 2 years to avoid property gains tax.
The plan is to use the VA Loan again locally and house hack, and then use my profits from selling my original home to buy an investment property (preferably multi-unit).
Eric DeVito When it comes to 5+ units you're into commercial territory. Which (for you) means a 20 or 25 year amortization on the loan. Not to mention it's usually 5-7 years fixed with a balloon payment (which can be derived through refinancing). That amortization adjustment has a huge impact on cash-flow. That's not to say it's good vs. bad but it makes a heck of a difference if you're going from 4 to 5 units.
@Andrew
@Andrew Johnson I understand your point. I wouldn't do that. I am looking for something towards 15+units.
I'm loving this discussion as I'm also looking to invest in an apartment complex ideally 16+ units. I recently looked at a 23 unit and was about to go into the contract but found something that made the numbers not work anymore so I'm back in the market. I'd love to discuss partnering possibilities to get into a $1M+ deals.
Chris Martin
Telling the guy to only invest local is ridiculous. My first investment was not local and many other investors start off in other areas.
I see no reason he should think small and limit his actions to play it "safe".
@Anthony Gayden So you bought a 10+ unit apartment as your first investment? Interesting. I don't know anyone who did that. You are the first! Congratulations!
Originally posted by @Chris Martin:
@Anthony Gayden So you bought a 10+ unit apartment as your first investment? Interesting. I don't know anyone who did that. You are the first! Congratulations!
No, I bought a 4 unit as my first deal and bought a second 4 unit 2 months later.
I wasn't a coward and I knew what I wanted.