Wanting to get into multi family investing NOW but short on cash

[Chloe Calder]

I have one rental property that I want to keep. It is a condo and they will be raising the HOA dues shortly, but I will still be making a profit off of it. I am interested in getting a multi-family property in Sacramento area and found one for under $500k but don't have the 25% down to make the offer.

It's been on the market for over 100 days so I'm sure there are some issues and I'm wondering if anyone has had success bidding very low on something that has sat for so long. 
Alternatively, I'd also like tips on finding an investor to help me make the purchase or find another way? 

Looking for any advice!

[Nathan Gesner]

Quote from @Chloe Calder:

Work with an experienced agent (10+ years, minimum)  who understands the market and property values. They can explain why this property is sitting for so long, what the market is doing, whether it's a good investment area, and more.

[Robert Rixer]

Seller financing is one of the most common way people buy properties with limited cash. You're unlikely to get a good deal tho, typically a seller uses seller financing as an incentive to get a higher purchase price.

[Justin Moy]

Apartment investing is capital intensive. IMO the only smart way to get into the game with limited capital is to find someone else with lots of capital. 

Someone has to bring the money, and the entire "invest with little to no money down" tips just add risk to the deal and aren't worth it in my opinion and experience. 

If the deal is getting no activity over a 100 day period then it's overpriced so there's room there for sure. In terms of experience lowballing sellers, I'd ask the broker what feedback they've gotten so far on the deal and why it hasn't sold. 

Underwrite the deal yourself and see what you can pay for it and float the number to him or her. No harm is testing the waters

[Greg Kasmer]

@Chloe Calder - You can provide an LOI (Letter of Intent) on the purchase without having a down payment... If you want to get practice making an offer. Sometimes people will ask for proof of funds, but most of the time they won't in traditional multifamily as they assume funds will be coming from multiple sources (i.e. syndication). If you just want the practice I would underwrite the property and come up with a number that makes sense to you - then take another 5-10% off the offer to see what they say. Good Luck!

[Jake Andronico]

@Chloe Calder

If you're short on cash, especially with older multifamily, I would NOT recommend it.

We help investors in the Reno, NV do 2-10 unit deals all of the time. Insurance changes in CA and in NV have older properties needing updates to get insurance coverage. 

A lot of carriers with properties past a certain age want to see updated roofs, plumbing, and electrical within the last 30 years. 

Small multifamily is generally older, has deferred maintenance, and is generally capital intensive. I would recommend having a partner or cash reserves on hand. 

Best of luck to you!

[Chloe Calder]

Ok thank you it seems like I'm going to be looking for an investor with cash on hand before I jump the gun on anything!

[David Hamer]

Hi Chloe.

Go Sacramento!  My home town.  

You can always make an offer on a property at a price that works for you even if it is well below the asking price of the property.  The worst they can do is say no.  If you get the property under contract and it is a good enough deal, you should be able to find someone (friend, family member, or other investor, etc.) who will lend you the money or partner with you to acquire the property.  If you can't find that person, you can always cancel the deal before the due diligence period ends and get your deposit back although you may burn a bridge with the listing broker. 

Happy investing!

[Alecia Loveless]

@Chloe Calder Many lenders only require 15-20-% down but you’ll still need that amount plus closing costs. Plus reserves.

If you do any kind of partnership make sure you get a written partnership agreement with 1-2 solid, agreed upon exit strategies.

I failed to do this in my first two partnerships and ended up in court on the first to get the arrangement dissolved, and had to jump through extensive hoops to end the second relationship which ended up in small claims court with the partner trying to extract the maximum amount from me based on trumped up charges. My lawyer was able to get this dismissed but it still cost me about $15,000 in legal fees 12 years ago when lawyers charged less.

[David Hamer]

Yes.  It is absolutely ESSENTIAL to have a written partnership agreement no matter how well you know the person.  

[Noah Laker]

So many ways to buy with lower entry cost. My two favorites are:

1) Creative finance (subto, seller finance, hybrid, etc)

2) Owner occupied loan (3.5-5% down payment instead of 20-25)

I'm a local broker and investor here in Sac, and manage 100+ STR/LTR properties. Hope this helps.

[Eric Gerakos]

Quote from @Chloe Calder:

I have one rental property that I want to keep. It is a condo and they will be raising the HOA dues shortly, but I will still be making a profit off of it. I am interested in getting a multi-family property in Sacramento area and found one for under $500k but don't have the 25% down to make the offer.

It's been on the market for over 100 days so I'm sure there are some issues and I'm wondering if anyone has had success bidding very low on something that has sat for so long. 
Alternatively, I'd also like tips on finding an investor to help me make the purchase or find another way? 

Looking for any advice!

Chloe, by what criteria do you think this multifamily property is worth buying, other than It's under 500K ? 

[Scott Scoville]

Hey @Chloe Calder were doing a lot of creative and seller finance which requires less money down on the purchase and they cashflow. Be happy to chat more when you have time.

[Marie Thomas]

Join as many real estate-focused groups in your area and NETWORK. Find people in your market who are already doing it and reach out to them to learn more. You may be able to meet the right person to team up with who could loan you the cash and find a seller financing deal!