Lynnwood, WA · Member since 2009 · 38 posts · 9 votes
For an embarrassingly long time "Buy an 8-12 unit apartment building" has been on my list of things to do. It has been talked about, pondered, debated but has never happened.
So, my thought is to make it a 60 day challenge and document the whole damn thing.
What I would like is some opinion on just how crazy am I, how possible this is and so on.
Essentially I'll be starting from scratch. I'm not dead broke or anything (thought that would make for a better story (Man buys apartment while living in a card board box), but I'm not sitting on enough cash to plunk down 20% or have credit score that makes bankers salivate.
Pretty much at a point where I have to make this happen to save my sanity.
Thoughts? Potential hurdles? Open to any and all input.
Investor · Takoma Park, MD · Member since 2016 · 166 posts · 147 votes
9y
Anyone (with the means) can buy an 8-12 unit building in the time frame you suggest. It is a great goal. But you might consider refining your goal slightly. Those types of buildings are not cheap these days, and it would be easy to buy the wrong building or pay too much. You are competing against a lot of foreign money now that is looking for a safe place to park and may be less concerned with IRR and CoC than you, as an investor, should be. Also set some parameters for your IRR and CoC goals. Really drill down on your market area so that you can be as realistic as possible when you begin trying to calculate IRR for a particular deal. And make sure you have a great team lined up to help you evaluate the property and do the due diligence needed to make sure you have a deal you really want to close on.
Rental Property Investor · Grand Rapids, MI · Member since 2017 · 113 posts · 91 votes
9y
Good Morning Chris!
Great goal – I too look forward to reading about your adventure.
A goal is a great thing, but a goal without action is nothing but a dream so get after it. An 8-12 unit is a SUPER great goal, but it comes with its own challenges even for seasoned investors. I’ve owned 4 units, 7 units, 12 units and a 14 unit, one thing they have in common is once you pull up out front you can’t leave.
Apt 4 is getting a new stove, tenant in apt 9 sees this and yells out where’s my new stove, so the doors start opening and head pop out. (slight exaggeration). Seeing that it’s your first property and just as a suggestion, why don’t you start with a 2 family and get your feet wet first before you go “all in” on a big project.
Smaller properties tend to be easier to manage, easier to fund if they all go vacant, and if you find yourself thinking - naaa, I hate this I want a boat instead - you’ll have a broader pool of investors or house hackers that would want to buy it from you.
I never thought I would like single family rentals, today I love them – 20 years ago I couldn’t understand who in their right mind would want one, I wanted bigger properties, perhaps it’s an age thing.
Go to your local Rental Property Owners meetings, network and find out what the guy’s and girl’s in the trenches say about both, then keep us posted.
Rental Property Investor · Austin, TX · Member since 2017 · 254 posts · 265 votes
9y
If 60 days is your goal to contract, that's attainable though tough; 60 Days to close is not likely, the typical close in MF is 60-70 days unless you do all cash which I never do nor ever would for a first deal. I would only do all cash once you are experienced and you find something with lots of upside (value-add) that no lender would touch.
New to Real Estate · OH/TN/FL · Member since 2016 · 135 posts · 35 votes
9y
I'm new with a future goal of buying an apartment building farther down the line in my REI journey. I'm excited to see how this pans out for you @Chris Cliff!
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
9y
I, too, would love to see this come to fruition with your documented steps. You must have some equity in your own home that makes you confident that you can pull this off. If that's the case, then your "I don't have the 20% down" statement is somewhat misleading.
I'm personally looking to purchase my second building, likely a 3 - 6 unit. But I'm not finding any help on how to do this without the 20% down or the income to support an additional building. So I'm very interested in your journey.
If 60 days is your goal to contract, that's attainable though tough; 60 Days to close is not likely, the typical close in MF is 60-70 days unless you do all cash which I never do nor ever would for a first deal. I would only do all cash once you are experienced and you find something with lots of upside (value-add) that no lender would touch.
Good Luck to you!!
I know that closing in 60 would be impossible. Under contract and headed to close is fine with me.
Investor · Takoma Park, MD · Member since 2016 · 166 posts · 147 votes
9y
Anyone (with the means) can buy an 8-12 unit building in the time frame you suggest. It is a great goal. But you might consider refining your goal slightly. Those types of buildings are not cheap these days, and it would be easy to buy the wrong building or pay too much. You are competing against a lot of foreign money now that is looking for a safe place to park and may be less concerned with IRR and CoC than you, as an investor, should be. Also set some parameters for your IRR and CoC goals. Really drill down on your market area so that you can be as realistic as possible when you begin trying to calculate IRR for a particular deal. And make sure you have a great team lined up to help you evaluate the property and do the due diligence needed to make sure you have a deal you really want to close on.
Set a goal to analyze a set number of deals a day.. it will help you and you can measure if you are making progress daily on your deal. Analyzing deals should be your first priority, next with making offers, since if you don't make offers you are on the sidelines
Rental Property Investor · St Paul, MN · Member since 2013 · 91 posts · 45 votes
9y
@Daniel O. gave you some great advice. I would absolutely set your goal to buy a building that has X% CoC (or IRR).
Start talking to lenders and get realistic about their requirements - you may need a partner/co-signer of some sort with no experience, and they typically have net worth requirements as well. If you are going to hire a management company, start interviewing them now - they should be a part of your team and even help somewhat with the acquisition.
I'm looking for small apartments too, need to turn a lot of rocks to find a good deal these days.
Anyone (with the means) can buy an 8-12 unit building in the time frame you suggest. It is a great goal. But you might consider refining your goal slightly. Those types of buildings are not cheap these days, and it would be easy to buy the wrong building or pay too much. You are competing against a lot of foreign money now that is looking for a safe place to park and may be less concerned with IRR and CoC than you, as an investor, should be. Also set some parameters for your IRR and CoC goals. Really drill down on your market area so that you can be as realistic as possible when you begin trying to calculate IRR for a particular deal. And make sure you have a great team lined up to help you evaluate the property and do the due diligence needed to make sure you have a deal you really want to close on.
Investor · Austin, TX · Member since 2015 · 263 posts · 186 votes
8y
@Chris Cliff Sounds like you have 60 days to find a deal, put it under contract, build a business plan for the property and find investors to co-invest in the property with you.
Definitely going to need to set up a goal sheet on what good looks like for the day and week.
Example - Week
Meet with 3 investors every week
Meet with 2 brokers every week
Meet with 1 owner every week to get an off market deal.
Daily
Analyze 1-2 deals
etc, etc
Define a geography to focus your efforts. Understanding a submarket or neighborhood will put you in the best position to know a good deal when you see one, build relationships with the brokerage community & owners.
For an embarrassingly long time "Buy an 8-12 unit apartment building" has been on my list of things to do. It has been talked about, pondered, debated but has never happened.
So, my thought is to make it a 60 day challenge and document the whole damn thing.
What I would like is some opinion on just how crazy am I, how possible this is and so on.
Essentially I'll be starting from scratch. I'm not dead broke or anything (thought that would make for a better story (Man buys apartment while living in a card board box), but I'm not sitting on enough cash to plunk down 20% or have credit score that makes bankers salivate.
Pretty much at a point where I have to make this happen to save my sanity.
Thoughts? Potential hurdles? Open to any and all input.
Lynnwood, WA · Member since 2009 · 38 posts · 9 votes
8y
Zero progress actually. Life has pretty well done its best to demotivate, slow down and keep me off task. But, I'm joining some new networking groups this week, and hopefully have the people around me focused on the same goal for a change, or at least working the same direction.