Buying Commercial Property for the first time.

[Austin Glidewell]

Thank you in advance for any advice you can provide me. I have worked for a private equity firm for a few years as an analyst and have  a good understanding of acquisition underwriting for several asset classes. I enjoy retail commercial and multi family apartment buildings. My lack of experience is more related to raising capital, but I am starting to learn more as time goes by.

With that said I am wanting to personally invest in a commercial building and/or an apartment building and need some advice on how to do this as a first time buyer. 

As an analyst for an established company it is easy to underwrite deals knowing that the company I work for has access to capital. However, if I am wanting to buy a commercial/multi-family property for myself how difficult is it to find debt financing, if I don't have enough equity financing to pay for an entire property.

For example if there is a 3 million property that I would like to buy and I raise 1 million from equity investors, how hard is it to find a lender that would provide the additional 2 million in debt, especially coming from a new investor like me?

Also, this might seem like a silly question, but when putting offers on commercial/multi family apartments, do sellers expect that the buyer will have financing in place before even making the offer? Or do buyers raise capital during escrow?

Thank you again,

[Brie Schmidt]

@Austin Glidewell - You need to have the financing in place before you offer.  I would create a sample portfolio of deals in your area that you would buy (on the market or recently sold) and bring that to the banks as an example.  You need them to be comfortable with you and your abilities first.  

Then once you have that you will need to raise the idea of equity.  Be careful because it is a SEC violation to solicit anyone directly, but if they have approached you about investing then it is ok.  Show them the same sample portfolio and get a ballpark idea of what terms they are looking for and how much they would contribute if you bought a deal like the example to them.  Then keep doing that till you have enough people interested to actually buy a deal.