Looking to Buy My First Multifamily Property - Welcome Advice!!

[Joel Douglass]

Hey BP Family -

I recently ordered Brandon's multifamily real estate book, and as a result I attended his multifamily masterclass (which was free when you bought his books).  I am committed to investing in multifamily, but I feel like I am all over the place trying to figure out where to start.  

I currently have a rental property that has done quite well, and am looking to sell it within the next 3-9 months.  As a result, I will have $100k-150k to invest into a multifamily property (or two).  I am currently struggling with two things - finding deals (as most everyone struggles with apparently) and running numbers.  I have connected with a couple real estate agents, who are sending me multifamily listings, but everything seems to be so inflated right now.  I don't want to buy something just to buy something.  

I'm looking for at least 4 units, up to 8 units.  I feel like I should stay within my local area for my first purchase (I'm in Greenville, SC) and am looking in the upstate of SC.  

My questions are:

Where is the best place to find leads for a 4-8 unit multifamily. We currently can't buy lists for SC (I tried through list source). I am looking for properties that are currently owner managed, and I will use a property manager to manage the property moving forward.  

I've looked at the bigger pockets calculators, and even tried to run numbers on some listing agents have sent me, but I am still struggling to understand if something is "a good deal" or not.  

In all honesty, I don't want to make a mistake. I'm asking for any help/advice you would give to a new investor. I'm all in . . . just need to get the ball rolling. 

[Ryan Hogan]

Joel, welcome to the game! Hope to see you out there crushing singles, doubles and home runs!

1-4 units is residential loans; 5+ units are commercial loans… these are significant differences. When looking at properties for 1-4, banks primarily care about your personal ability to repay the loan. With 5+ units, while they of course review your personal ability, they put more emphasis on the cash flow of the property itself and how its ability to perform is of high importance to them.

Always keep in mind the following: 1) market cycle; 2) debt; 3) exit strategy (h/t Bill Ham).

As you’re already seeing with deal flow, we’re towards the top of the market cycle with valuation. How do you tell when we’ve reached the top? … you turn around and say “there it went.” There's no way to time the top.  Debt relates to your business plan, do you plan to buy and hold for 30+ years? That can handle one type of debt. Do you plan to buy a fix and flip and sell in 2-3 years? That would take another type of debt… note with 5+ units and commercial loans, there are pre-payment penalties which can hurt if you want to sell early and you’re not aware of them. Exit strategy… part of your business plan, fix and flip or 30+ year hold or other?  Rehab via cash flow from property, or need to raise capital up front to complete rehab quickly?

GSP is a great market… I’m invested in a deal in Simpsonville. A good video that was helpful to me starting out is: How to Analyze a Real Estate Market in 60 Minutes - Know More than a Local Expert - Neal Bawa… (BP frowns on link posting… so copy-paste in google, it should be 57 min long).

For some other let’s say high level book on the “start-to-finish” for MF investing, helpful to me are:

Wheelbarrow Profits by Jake and Gino

Multifamily Millions by David Lindahl

Emerging Real Estate Markets by David Lindahl

Creative Cash by Bill Ham (helpful for ‘seller financing’ options)

Once you get through the “philosophy” of these, some more “meat and potatoes” digging into the actual numbers and case studies:

The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges

The Complete Guide to Real Estate Finance for Investment Properties by Steve Berges

YouTube has some good underwriting resources:

Break Into CRE with Justin Kivel

The Multifamily Show with James Eng at Old Capital

Adventures in CRE with Spencer Burton

Bruce Kirsch

Local meetups… you'll learn a lot from other investors in your market… an active local REIA is UCREIA (Upstate Carolina Real Estate Investors Association) they have a monthly main meeting and then various sub-groups that meet monthly as well.

Ben Jones and Ivan Jenkins run Multifamily Investor Nation – Greenville, SC sub-group, they do a hybrid with in person and virtual together. They meet first Monday of the month.

Hopefully I'll see you at a REIA or MF meetup in the future!