Atlanta apartment investing

[Stephan Nemeth]

I am closing on a four unit property in the next couple weeks but really would like to purchase an apartment complex in the Atlanta Georgia area.  After have gone through the bank process to get a conventional loan to purchase the four unit property, I am incredibly curious as to how it's possible to get financing for a much larger purchase, such as an apartment complex. Also, financing aside, any insight on partnerships, best practices, stories or anything else related to help me realize this next goal.  

[Azeez K.]

@Todd Whiddon - Thanks for the shout out it is much appreciated coming from greatness such as yourself :-)

@Stephan Nemeth congratulations on your quad its the step in the right direction. Like you I have had a Quad in O4W by the beltline near and Krog city market. The valuations of properties ITP have been crazy.

In regards to your questions:

Financing for Quads/Small MU:

1. Traditional Financing - Under your name by putting X% down based on one's credit etc.

2. Small Business loans - You can buy under small business commercial loans for properties in 250-750K range. Typically, these are offered to entities and would be considered a commercial loan and as others have mentioned you have to pay 20-25% depending on property conditions. Typically, banks would want a personal guarantee and a debt service coverage ratio of 1.25 min (varies w different banks)

3. Larger commercial properties - Depends on the revenue generated from the MF plus other factors. As @Mark Mosch rightly said in the thread its easier to get a loan on $2M property than smaller loans. You can get a non-recourse loan via HUD FHA 223 Apartment loans.

You can use Syndication for larger properties, Partnership/JV, Loan Assumption, Seller carry, Land contract etc to buy the apartment buildings.

In regards to Partnership - I agree with @Sterling Shuttlesworth advice 

Couple things - 

1. Begin with the end in mind - every partnership will dissolve at some point or the other

2. Make sure the team shares the same vision and strategy and you are well aligned 

3. Legally make sure you have the right operating agreements vetted by a professional and includes dissolution of entity, what-if scenarios, roles /responsibilities are documented and discussed

4. Make sure every partner either creates value or adds value or else there should be no room for the individual on the team

Hope this helps! 

Wish you much success