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Updated about 4 years ago,
Skilled Multifamily-ers: What Makes a Good 1st Time MF Partner?
Greetings all - I have two SF units that I have been managing for a few years, and as I look for my third acquisition, I'm considering whether a 4 to 12 unit MF property is actually a better next step than SF unit #3. I've been reading up and listening to MF podcasts, and watching YouTube finance videos to learn about recourse/non-recourse loans, etc.
My working understanding is that for certain financing for 5 or more unit buildings, the banks will be looking for the investors to have a collective Net Worth bigger than the loan, for the primary dealmaker to have appropriate Net Worth and liquidity, and for there to be someone with MF experience involved. (please correct me if I'm getting this wrong)
Before I start approaching potential investment partners, I want to get my balance sheet, reserves for current properties, etc, all in order so that when I approach someone with MF experience, they say "oh yeah, your position looks good" and that gives them confidence to be a potential partner. (As an example, I presently have 3 months of rent equivalent cash reserves for both units, and I will reach 6 months of rent equivalent reserves in Spring 2021.)
Would any experienced MF investors here be willing to chime in on what an ideal, or at least a good, well-organized first time MF investor should look like in terms of a balance sheet, performance of a current RE portfolio, etc? Thanks in advance for any tips!