When is an investor "ready" to jump into commercial multifamily?

[James R. Copeland]

So I've got a couple SFR's so far and would like to eventually, someday, own an apartment building or two. In my area a SFR of good quality can be found around $300k, while an apartment building is going to run well over 2 Million... From what reading and asking around I've done I've learned that commercial loans for first timers typically want something like 30% down payment just to come to the table, and then there's the higher interest rates, and balloon payment to add to the worries. So it sounds like the financing portion is completely different, what else makes it a challenge to get into? What's it take to make the leap successfully?

[Bjorn Ahlblad]

Originally posted by @James R. Copeland:

Thanks Bjorn! Here in Vancouver 2 Mil can probably get you between 10-18 doors I would guess. The market has appreciated considerably in recent years. I could go a little further out to Longview, Kelso, etc for some lower prices, but I'm not as confident in the demand and quality of tenants having spent so little time there. 

When you got started with your 12 unit did you find the loan application much different? How much of a down payment did you need? 

 Two mil for 18 doors is over 100k per door; it might be hard to get a decent cash flow. In my case I worked the numbers 70% financed, and a PM. In the end we paid cash and my wife manages the property, so I have no idea about the loan process. A local independent bank could be the best way to go-they have a lot more freedom. Go talk to one beforehand and let them know what your plans are, they might even offer you a lead or two; often they are in the know. All the best!