Multi Family Investing

[Alexander Parada]

Hello Guys, 

Looking to purchase my first multi family I currently own 5 single family and I"m seeking better returns. My budget for a multi family is 1M-1.5 M I'm looking to purchase in Dallas or Florida. 

I keep hearing from podcast Loop net is where deals go to die and after combing through them Im starting to believe that does anyone dabble in Multi Family in Texas or Florida that can suggest a broker to help out with this ? The reason in these states is because of market growth but I know mid-west has higher caps and lower arv's. 

Whats your typical down on a multi One Million Prop ? Which I have ready just wondering what you folks find. 

DO you ask for the last three years rent rolls or would twelve months suffice? 

Thanks in Advance for you answers just a Man here in Los Angeles area trying to take over the world a unit at a time :) 

Reccomend brokers that would be great. 

[Andrew Johnson]

@Alexander Parada I don't know the Dallas market well but getting a commercial multifamily in Dallas for $1M or even $1.5M might be a tough ask. I'm just assuming commercial multifamily because you said LoopNet. I know there are non-commercial multifamilies but you'll see a lot more of them just cruising the apps that pull from the MLS. Anyway, I'm sure there are places in Florida where that's extremely reasonable. I'm also assuming (yeah, not too smart of me) that you'd want to be in a decent part of Dallas since you're out-of-state and not seeking the roughest areas.

And unless you're looking for a fixer the "lower ARV" doesn't really come into play. And if you want your first out-of-state venture to be: 1.) first time with commercial, 2.) first time investing out of state, 3.) first time in multiunit, etc. you could be in for a lil bit o' pain. You might be better served by seeking out a yield play even if the projected returns are a little lower.

As for your questions, I'd say...

1.) Typical down: 25% with 9 months PITI for reserves, 5-7 year fixed-rate with a 20-25 balloon. You can do better, you can do worse, but that's probably a decent middle ground. Points, fees, etc. vary with lenders but appraisals aren't cheap :-)

2.) Ask for:  Ask for whatever the broker, agent, seller, etc. can provide.  The last time I asked for a T-12 I received 3 years of financials, a list of "improvements" with costs, etc.  The improvements are in quotes for a reason but that's another story.  The bottom line is that (at first) ask an opened ended question and see what gets sent to you.

Side note, my (limited) experience has told me that banks like 3rd party property managers.  They like to be able to get the T-12s and rent rolls from them.  They like when one is managing the property post-purchase.  It just helps, for them (I think), to de-risk the deal.  It helps even more (since it's likely a community/regional/local bank you'll be talking to) if they know the property manager.  Depending on the size of city (likely not with an ecosystem the size of Dallas) it's not crazy to think they all run into each other from time to time.

Anyway, as a Cali out-of-state investors, I think this is all a moot point.  The first priority has to be picking your Top 2 cities.  Maybe it's Dallas + 1 in Florida.  Maybe it's both in Florida.  Just narrow it down based on your criteria and start to get more granular.  I have my doubts that the same investor is going to be stoked about both Dallas and Destin.  They're just two incredibly different markets.