15 unit student- housing apartment building

[Nancy Frazier]

Hi BP family, 

I'm a residential lender in Atlanta, GA and looking to grow my personal portfolio and expand my creative financing knowledge.  Presently, I own my primary and a rental I use for AirBnB in the mountains.  In the next two or so months, looking to purchase a new primary and then convert my current to a short term rental.   Presently, I'm 28 and aiming to hold 6 properties by 30.   I really love AirBnB/short term rental for a number of reasons, but mostly the heart string ones. It makes me feel to have people love my homes.  

In reading Brandon's book, particularly following the 10x rule he cites, it's gotten my wheels turning on an apartment building.  I've been looking all over, particularly smaller, college towns.  I found a 15 unit apartment building in a great, established college town right across the street from downtown and campus.  Building was built in 2010 and has a mix of two 4b/4b, four 3b/3b, and nine 2b/2b.  Average rent is about $500/room.   List price is currently 2.3m, but it's been on and off market for a long time.  I'm not absolutely set on this property, but it's gotten my wheels turning and flipping from "I wish I could buy something like this" to "HOW can I buy something like this."  Since I've been in the Conforming loan world my whole life, financing 15 units is a new brain exercise for me.  Now, I just wish my huge multi units were closer to 300-600k like in his book.. that kind of money I know I could figure out. 2m, on the other hand.. 

Will a HML even entertain talking to me about what it requires to look at financing this? Do you automatically think about resources I should be studying?

[Azeez K.]

Hi @Nancy Frazier

Start with the basics i.e. Education

1. Financials: Learn financial concepts of evaluating a MF property.

• Income Approach to Valuation
• CAP Rates
• Debt Service Coverage Ratio
• Cash on Cash Return
• IRR
• ..Others google
• Guidelines - 50% Rule

2. Reading: Book - Multi-Family Millions - David Lindahl | BP Blogs & Forms | How to buy a small Multi-Family Property

3. Evaluate MF Properties - Constantly look at MF properties in your area and evaluate the MF properties. The key is to identify what makes a good deal vs. a bad one. Gaining a sound understanding of the financial concepts will help you in this area.

4. Network: Network with the following individuals

• Commercial Brokers -
• Property management companies
• Multi-Family Investors in your area. Use the BiggerPockets meet section to seek investors in your area
• Mortgage Brokers specializing in MF properties. Understand the Financing options

5. Take Action - Place offers on MF properties

In regards to tips for finding Multi-family properties:

1. Reach out to Realtors in your farming area and set-up different searches for MF properties that match your criteria.

2. Property Management companies - seek out a few property management companies/property managers in your farming area and inquire about properties or landlords wanting to off-load MF properties.

3. Network - with fellow investors, property managers, Realtors, wholesalers etc and let them know you are looking for MF property to acquire.

4. Auction - Periodically look at auction websites such as johndixon/hudson marshall as they have MF properties for Auction. You don't need to pay all cash in most instances as you can finance and close these properties in 30 days.

5. Commercial Site: Check out sites like LoopNet/cityfeet for MF Properties.

6. Commercial Broker sites- Check out commercial broker sites like BullRealty and individual broker sites as they sometimes list smaller MF properties could be duplex, triplex etc.

7. Craigslist - You can find some MF properties on Craigslist. However, I have never had luck with this approach.

8. Marketing - Send letters to MF property owners.

In regards to your question "Will a HML even entertain talking to me about what it requires to look at financing this?.." Again it depends. Typically, no but depends on the lender. However, I would avoid HML loans for MF acquisitions. I would rather team up with someone already doing MF and partner with them. You can work out the split and it would be better off than HML loan.

Hope the above helps provide some guidance. 

Good Luck and Much Success!

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