How to get into medium to large apartments complexs?

Question

So this is my first post on here guys. I got a reference from some guy over on ATS and thought I'd check it out. Looks like a wealth of great, non-BS, info. Awesome.

Anyway, I'm 23 and an aspiring landlord. I know it's always best to start out small, but from what I'm seeing it seems like single family and duplex's hardly make enough money to cover expenses, and on top of that, you've got a bunch of money tied up in a down payment that you can't use on some other property (unless you can use that equity as a down payment on another property. Not sure how that works).

Anyway, bottom line is, if they hardly make any money, how does one eventually build up to being able to afford a full size apartment complex or commercial property? Or better yet, build one? Seems like that's where the real money is, but it also seems like it would cost a fortune as well.

Sorry for the ignorance, as I said, I'm a newb. ;)

Bryan Hancock · Answer

The way to get into bigger deals is to learn how to raise money through syndications and equity raises.  The way to raise money is to have a track record.  There really is not free lunch.  Crawl before you walk and walk before you run.

Jeff S. · Answer

The easiest way to get to the top is to have a way to make money outside RE or inside as a top notch agent, builder, rehabber etc. When you start from scratch it is a tough go.

Curtis Gabhart · Answer

Alex,

Start small. Make sure you like the business of real estate. There are many different niches so start slow at first, keep a good job with steady income and make sure to keep good credit so you can get loans.

I wish you the best of success

Bryan Hancock · Answer

Property management companies generally manage smaller units and do manage single family product.  Larger units generally have in-house staff to support the property management.

If you are serious about learning I would find a local syndicator and do whatever you can to help them.  Starting out smaller is really the best approach IMO.

Alex Legore · Answer

What is a good starting point?

Also, do property management companies usually manage things like duplex's, or just the bigger stuff?

Bryan Hancock · Answer

The money is in the money.  If you learn how to raise money you can fund your deals.  Real estate syndication is the top of the real estate mountain and it requires a track record and knowing what you are doing.

Alex Legore · Answer

I guess a more appropriate question would have been; "What are the strategies people use to get to the top the quickest?". I know that's the 64 thousand dollar question, but people do make millions in this line of work, and I figure all of them couldn't have had millions to start off with.

Basically what I'm getting at is, it seems like it would take forever to work up to a seriously profitable complex, and I was wondering if I may be missing some basic concept.

Nathan Emmert · Answer

I'm new to the game but everything I have read says avoid the big banks like the plague... Chase, Wells Fargo, BoA, etc...

Talk to your local banks if there are any left back in ND (I know there was one in Mandan when I was growing up) and local credit unions.  They tend to keep more homes in house and don't worry as much about being able to resell the deals, they can get more creative with their financing.

For me, I was told I can't get conventional funding for an NOO because of a short sale 18 months ago (didn't stop me from getting my primary residence though, go figure!)... but in talking to local Credit Unions, it's not a problem as long as my credit score is still within thresholds.  They just play by different rules.

Zachary Dosch · Answer

Are you finding banks agreeing to take a lein position on the equity of several rental properties in order to secure a loan for an apartment complex?

Basically all of the ones I have been working with just want the downpayment period.

In the name of leveraging other people's money, it would be great to learn a couple tips and tricks. I know it does benefit your sitaution if you have your entire relationship with the bank you are trying to borrow from but I haven't seen any go that far yet.

Sometimes you can get banks that are new to town to basically buy the deal which means that they lower the interest rate or give your more favorable terms because they are just looking to establish a book of business.

Nathan Emmert · Answer

Why would you sell the first property if you had no equity in it?  You've already "given" the equity to the bank as collateral on the next loan.  I'm guessing the sale of the property would trigger a call clause on the bigger mortgage and you'd end up passing all the proceeds on to the bank after you pay a realtor's fee, taxes, etc... not a great deal for you.

In real estate, you have two choices... grow slowly but constantly saving up capital and making 25% down payments to purchase performing properties... or add value either through rehab or management to distressed properties which allows you to develop equity.  The property may only be worth $100k but if you could get the occupancy from 40% up to 90%, if you could do the deferred maintenance that was dropping rents to $300 a month instead of $550 a month, the building is obviously "worth" substantially more growing your capital base.

How to get into medium to large apartments complexs?

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