Journey to the First Multi Family Apartment Building Purchase
I started listening to the The tride of Multifamily Mentors podcast hosted by Terrance Doyle and Chris Lopez on the Bigger Pockets youtube channel and the knowledge shared in those shows is directly responsible for me starting this multi family journey.
The reason I said "journey" is because I have in the process of buying my 1st small multi family apartment building and one of the things that Terrance and Chris talk about in their show is that we should start documenting your real estate journey and this is my effort to document every step of the purchase
Step 1: Choosing the Market
I had already bought a turnkey property in Cleveland, OH so I was aware of the market and the prices so I was able to work with a commercial broker and property manager in the area to help me analyze a deal.
Step 2: Finding the Deal
I started calling Commercial Brokers in the area and spent close to 2 hours everyday for 2 months straight on Crexi.com looking for multi family units that fit my budget and would not involve a lot of value add.
Step 3: Finding a Partner
Bigger Pockets has been amazing to find like minded people when it comes to your niche in investing and I was able to connect with an investor who had done Single Family home deals and was starting out in Multi Family. Also, the best way to find out if it is going to work with your partner or not is to do a deal and we are already 50% into the deal.
The next part I want to share are the learnings and I will keep updating this blog as we get closer to the multi family deal with every step.
Learnings:
The path to acquiring multi family real estate is long and different than residential. You can most likely close on a single family in less than 15 days if you buy it all cash. If it's a loan, then it might 21 days maximum but lenders are able to close pretty fast. But it was so different when it came to Multi Family. We went through so many due diligence documents and are still going through documentation as we get closer to the deal.
Reviewing P&L statements, residential leases, tax returns and rent roll were some of the documents we went over to get an idea of how the asset is performing.
After my initial conversation with the broker and partner, we felt like we could offer 100k lesser than asking which we tried and they counter offered 50k less so it was a good start right away. I am still getting used to "asking price" portion of multi family because it is bound to change and it doesn't really mean anything. Your lender will analyze the deal and tell you what you can offer.
Currently, we are in the phase of waiting for the purchase agreement to come in so that we can proceed with the due diligence of the building.
Most Popular Reply
Well done and great work. You really put in the time and did your due diligence.