Buying a 24 unit as your first multi-family investment

[Blaine Watson]

Hi everyone, I wanted to get some ideas on whether to save up and do a large multi-family complex first (24 or so) or whether to start small. I want to be cautious, but also hear that its hard to generate cash flow with a small amount of units and that the bigger investors with 24 units and up will be hard to compete with in the local area. Can I just do alot of homework and still pull it off with a 24 unit or is this a bad idea cause I don't have the experience behind me. Thanks in advance for your input Regards Blaine

[Kyle R.]

Originally posted by @Jaysen Medhurst:

@Blaine Watson, I think you should start smaller--a 4-plex maybe. You're going to make some mistakes and a smaller property will be easier to handle as you learn the ropes.

Additionally, you will have a very hard (read, near impossible) time getting commercial financing for a 24-unit property if you have no experience. That's the determining factor (beyond the deal fundamentals) for lenders. Why would they lend a couple of million bucks to someone with no experience?

I wouldn't let financing stop you from trying to acquire a larger multi-family property for your first deal. My first multi-family purchase was an 80 unit and prior to that, I only had three condos. I financed the property via a commercial loan from one of the larger banks. My experience wasn't questioned and I was 24 at the time. As long as you have the capital to put 20% down and the property has a solid DSCR, financing shouldn't be an issue.