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Updated over 4 years ago, 05/05/2020
Start with 300 Units?
I've been a residential investor for 15 years and 2 years ago, I committed to moving over to multi-family. However, I'm struggling to find my place. So far, I've identified 4 ways to finance apartments:
1. Buy the building yourself or in a JV
2. Syndicate
3. Owner carry/owner finance
4. Some combination of the 3 options above
I like #1 above, but then my partner and I have enough net worth and down payment to only afford about 50-60 units. I want to do 200-300 right away. But again, the 2 problems are net worth and down payment.
Syndication can get the funds raised but again, how do you get enough collective net worth to cover the loan amount? I'm probably missing something in my understanding of commercial loans?
Owner carry sounds amazing but will definitely be harder to find, especially on these bigger deals where there is possible interest from institutional investors (depending on condition of property of corse). I want a value-add so might not be competing with many institutional guys but there are enough people buying now that will definitely be some competition.
So for those of you who got into apartments and took down 200+ unit deals for your first one, how did you do it? Even if you're syndicating, those who are signing the bank note have to have a net worth to cover the value of the loan, right? Is it really that easy to find partners for your first deal who have a collective net worth of 20+ million? Are there other options on how to get around the requirement to have enough net worth to cover the loan amount (I understand you can be just slightly under the total value of the loan if you're a high income earner)?