Investing in Apartment Complex

[Amir B.]

Hi Guys,

I have been on BP for a year and a half now. My wife and I currently own two SFH rentals in Sacramento and Parma. We stopped making offers on SFH/MFH because of offers kept on getting rejected (Parma/Lakewood).

Recently an idea popped into my head. Why continue to invest in SFH or duplexes and why not invest in a 40 or 50 unit apartment complex? The goal is the same retire early (60 years old). However, I am aware that commercial is a different ball game.

I'm seeking advice from other investors who changed their strategy from residential or commercial. A good or bad idea?

Please help. I am happy to share any information.

Thanks,

Amir

[Michael Le]

Hi @Amir B., a few points.

1. Expect many rejected offers for apartment complexes too. The market is hot for MFH so there is a lot of competition for deals. Don't think it will be much easier than SFR.

2. The reason why most don't make the jump is due to financials, either your net worth, liquidity, or the ability to raise money. Requirements are different for commercial loans so just make sure you're prepared for it.

3. Because of the above financial requirements most people end up doing partnerships, joint ventures, or syndications. Some people like to be the sole boss running a deal. If this is you then you will need to figure out how to get an apartment all on your own.

4. For me at least, overall it has definitely been the right move to go from SFR to MFH.