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Updated about 7 years ago on . Most recent reply
![Lionel Henderson's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/719923/1621496051-avatar-lionelhenderson.jpg?twic=v1/output=image/cover=128x128&v=2)
Transitioning from Residential to Apartments
Hello All,
I currently own a 6,000 square foot triplex in Los Angeles, California that I am doing Airbnb on two of the units and renting one. I have been cash-flowing very well for the past few months but prior to buying I was very interested in owning Apartments. I went ahead with the triplex because I though it would be good to get my "feet wet". However NOW my interest in Apartments is back and I've been looking at a few deals in Long Beach, California. I want to pick all of your great apartment investors brains as to how to approach now my first Apartment deal.
First off I don't have a huge portfolio yet obviously so I'm curious how do I approach the banks?
Do I need to go into my first deal with someone who currently has apartments?
Also I have been meeting with some local investors who are interested but will that be enough to to get full funding for the deal?
I greatly appreciate your guidance on this and any strategies you have to go step by step closing my first apartment deal would be great!
thank again
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![Chris Grenzig's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/652398/1621494735-avatar-chrisg149.jpg?twic=v1/output=image/crop=1547x1547@147x213/cover=128x128&v=2)
@Lionel Henderson if you don't have the finances to cover whatever size property you're looking at, then you're going to need someone to be at least you're balance sheet partner. Even if it's non-recourse, banks and mortgage brokers and agencies need to see you can cover the loan anyway.
If you're worried about the lack of experience, it's definitely a good idea to look for more experienced operators and try to work out some sort of a JV structure that works for both of you.
When you start to talk to investors, at some point you have to ask what they would be willing to put behind a deal if one came up. If they balk at that, they'll balk when a deal actually comes up. They might low ball or overshoot what they'll actually do, but thats a different issue entirely. You also need to set their expectations. Say something like, "if I had a deal in x, y or z market that was a 3-7 years hold, made you an average of 8% cash on cash and a 15% IRR is that something that you would invest in?". That way when you have a deal like that you know who to go to. OR they might say no I need at least 10% COC and the IRR doesn't matter as much, or maybe the want to be in and out after 2 years, or maybe hold for 12 years, or want an 18% IRR, etc. My point is you won't know until you ask or you set their expectations accordingly from the very beginning.
Hope that helps!