How to invest in Large Apartment

[Michael Li]

Hello, I have always had this burning question regarding how to invest in a large apartment deal?

I assume there should be many investors in the deal and maybe a General Partner to manage the deal, but do we have to be an accredited investor to invest in this type of deal? if not, where can we find the opportunity to join one? as I'm sure they can't do a ton of advertisement?

Of course, I'm not talking about invest in REITs, it would be too easy lol.

Understand it might be a noobie question, but hope someone can show me the road.

Thanks 

[Michael Dang]

Network, network, and continue to network with like minded individuals.  Go to local meetups  and conferences where you can meet and build a substantive relationship with GP's.  Listen to multifamily podcasts as some of the producers are syndicators who provide a lot of very good educational content.

If the offering is structured as a Reg D 506b syndication then up to 35 sophisticated (non-accredited) investors can invest.

[Matthew Baltzell]

@Michael Li you don't have to be an accredited investor to invest in large multi-family deals. It all depends on how the deal is structured. 

As @Michael Dang mentioned you could be a sophisticated investor in a 506 B offer, but you would have to be an accredited investor to invest in a 506 C offering. 

Both of these are SEC registered securities.

However, if you weren't raising money and had other partners you wouldn't have to jump through the SEC regulations and could structure a deal differently which in turn would allow you to invest in larger deals without having to be an accredited investor.

[Cody L.]

Originally posted by @Michael Li:

Hello, I have always had this burning question regarding how to invest in a large apartment deal?

I assume there should be many investors in the deal and maybe a General Partner to manage the deal, but do we have to be an accredited investor to invest in this type of deal? if not, where can we find the opportunity to join one? as I'm sure they can't do a ton of advertisement?

Of course, I'm not talking about invest in REITs, it would be too easy lol.

Understand it might be a noobie question, but hope someone can show me the road.

Thanks 

One way to invest in large deals is how I did it. Work your way up the property ladder till you’re the guy buying the large apartment. Plenty of banks will loan you 80% of the deal. With some creativity you can get 90% financing.  

Personally I’d stay away from equity partners and if you need $ use debt partners. 

[Alina Trigub]

@Michael Li 

I second what @Michael Dang told you: networking is the key here. In our day and age, this can be done in person (which is still a much better option) and virtually. What I gather from your post, it sounds like your preference is to be an equity partner in a deal. If you still haven't completely decided, then here's an article that should give you the additional guidance: https://www.biggerpockets.com/member-blogs/10850/8...

Also, you can start you search right here on BP by going through the old posts as well as virtually meeting people here. 

Last but not least, Reg D rule 506b requires that the deal sponsor and an investor to have a pre-existing relationships prior to investor's investing in a deal. Keep it in mind and use it as a check point. If someone is offering you to invest in a deal at a first conversation, that should raise a red flag. 

To help you with a syndicator's conversations, here's a post that has guidance on the questions to ask them: https://www.biggerpockets.com/member-blogs/10850/7...

My best!

[Theo Hicks]

There are multiple BP threads that list out active apartment syndicators. 

If you aren't accredited, make sure you let them know up front. As @Michael Dang mentioned, 506(b) offerings can accept non-accredited investors, but I know a few syndicators who do 506(b) but still only accept accredited investors.

[Victor Robinson]

@Cody L. When you say “debt partners” you’re basically talking private lenders, right?

[Charley C.]

@Michael Li any specific region? I am in Texas. I build apartments in Texas.  I do have a method to get you in to larger apartments that sell at lower cap rates, if that is your reason.  I got an idea that mitigates a lot of your exposure and risk. If you are interested, please PM me or connect. Be happy to share more with you 

[Todd Dexheimer]

Yep, network. Get to know people on this site, through your meet ups and conferences that are doing deals. You can also hear syndication companies on podcasts and reach out to them. The other way is to go onto crowdfunding portals and invest through them. 

And yes, you can invest in deals if you're non-accredited. Just make sure you form a relationship with the sponsor and get to know what you are investing in. 

Here is a blog on what to look for

https://www.biggerpockets.com/member-blogs/10145/83067-limited-partner-s-guide-to-investing-in-the-right-deal

[Michael Li]

thank you guys and gals, i appreciate all the feedback, it looks like i still have a lot to learn. it seems networking is on the topic of the list, i'll try to start there.

[Cody L.]

Originally posted by @Victor Robinson:

@Cody L. When you say “debt partners” you’re basically talking private lenders, right?

Yes. People that give you a loan, with terms to be paid back. Vs people that give you $ for a piece of your equity.