Should I check It out?

Question

Earlier today drove by an 8 unit building that's for sale I don't know any specs to it as im very new to the business and I only just saw it today. I was wondering would it be wise to check the place out as potentially a first investment or would that be biting off more than I could handle. I do know that its a short distance to the campus of GSU maybe 5 miles tops. I figure I could still cater to the collage demogrphic despite some of the  massive apartments thats going up. So my question would be. Should i try to figure out how to start off with an 8 unit  or continue to plan on doing some flips to start out?

Jonathan Twombly · Answer

@Nicole Mercer Nicole, I would say look at every deal you can.  Even if you are not yet ready to buy something that big, it will only help you to start familiarizing yourself with these deals now, even if you think that it will be years before you are ready to take one down.  Keep looking at deals, keep analyzing them, even if you don't plan on making an offer.  Not only will you start developing the skills you need to be a good investor, you may also start to develop some relationships with brokers along the way, which will really help you once you start moving in that direction.  It will also help you learn the market where you are, which is something that will keep you from making bad deals in the future.  The more you learn, the better.  Learning is always good, and the best way to learn is through experience.  Don't be afraid, and go for it!  You have nothing to lose but a few hours looking at a property and analyzing it!

Curt Davis · Answer

Do you have the funds for down payment plus closing cost? Being an 8 unit will most likely require 25%-30% down payment.  Also on something like this you would want to have a substantial cash reserve set aside for potential issues and to cover vacancy.

If your new and have limited funds then I would suggest no, look for something cheaper.  If you have the funds and its no issue then surely check more into it.

Elizabeth Colegrove · Answer

An 8-unit building  is considered a commercial loan. So your loan is going to be based on different requirements than a residential loan. As to your question in depends on your comfort zone .

Arlan Potter · Answer

if you can get the money and it's a bargain, buy it.  Let the tenants pay for it.

Jonathan Twombly · Answer

@Nicole Mercer Nicole, @Amanda Hensley is right in that you probably won't be able to do a real walk-through unless you make an offer.  However, you can get financials from a broker up front, and usually you can get a viewing of a property if you come across as serious.  Asking for financials up front and analyzing them is a way of appearing serious.

Another good thing to do is:  if you don't like a deal on the numbers, tell the broker why.  That shows the broker you are thinking about the deals seriously and separates you from people who are just playing around at real estate investment.

Learn how to underwrite properties, get the financials, do your underwriting, and talk to brokers about your thoughts.  The more properties you underwrite, the more you will learn about the local market.  The more you learn about the local market, the more you can impress upon brokers and potential investors how much you know.  If you can show them that you know what you are talking about, they will take you seriously, even if you have not done a deal.

And it just takes one.  I can tell you from personal experience, the attention you get from brokers before your first deal and after your first deal are very different.  Once you've done a deal that has gotten a broker a commission, that broker will pay attention to you, and so will others.

But it all starts from being diligent about learning the market, and the only way to learn the market is to run the numbers on as many properties as you can.

Jason Eyerly · Answer

I'm surprised nobody has mentioned this already: Jump on it! If you can get it under contract as a good deal to another investor you can still make money. It's been said many times on BP, that even if you are not partnered up with big money, the money will find you if the deal is good!

Amanda Hensley · Answer

Maybe this is area-specific and your location is different, but I have found that you often have to write an offer on a multi unit property first, subject to interior inspection.  This is supposed to prevent tenants from being unnecessarily convenienced and show the seller that you are a serious buyer, because you will have worked out all the price (and some of the financing) stuff.

Nicole Mercer · Answer

Thank you Jonathan for the advice, these first few weeks have been a bit confusing as to who, what, and how, but Im slowly getting to my starting point. I was taking my brotherto work today and I saw a sign for a 23 unit that wasn't up the day before, lol, maybe its a sign. I think it would be fun to go and at them maybe go though the process hypothetically. It's kind of a no brainer but I wonder if I should be upfront in my intentions. That I'd like to take a look at the properties in an educational stand point? And have any of you guys done that in any other areas?

Nicole Mercer · Answer

Ok, then I think the best option for me would to continue in rehabbing. I'm eager to start, but dont really know which is the best method to do so.I figure if I stick with doing a couple of rehabs I could get a buy and hold duplex. Thank you, for the responses. Plus the fact that I couldn't find it though web surfing.

Should I check It out?

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