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Updated about 8 years ago, 10/02/2016

Account Closed
  • Investor
  • Cleveland, OH
58
Votes |
150
Posts

Made the leap to commercial real estate!

Account Closed
  • Investor
  • Cleveland, OH
Posted

I have been investing in SFR for a few years now and I have always had my sights set on acquiring an apartment building. I closed on my first 8 unit apartment building a few months ago, although there is still a lot of work to be done. This is a success story for me just for finally getting over the hump and getting my foot into commercial real estate.

There have been a few bumps in the road but thankfully I have an excellent property management team who has lifted a lot of burden off my shoulders. 

Already saving and looking for the next one, hopefully in the area of a 15-20 unit 

User Stats

2,093
Posts
1,023
Votes
Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
1,023
Votes |
2,093
Posts
Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
Replied

@Account Closed Congratulations on getting into investing in apartment buildings! That is a major goal of mine as well! What was your biggest challenge of getting to invest in that eight unit apartment?

  • Peter Mckernan
business profile image
The McKernan Group
5.0 stars
32 Reviews
Account Closed
  • Investor
  • Cleveland, OH
58
Votes |
150
Posts
Account Closed
  • Investor
  • Cleveland, OH
Replied

@Peter Mckernan Biggest challenge - finding a lender that had a low enough minimum threshold that also had reasonable terms I could make work. This purchase was sort of an awkward in between property as far as lending. I found a lot of lenders who were looking for at least 500k or 1 million purchase price.  Hard money lenders were willing but interest rates were outrageous.

Good luck! Feel free to reach out anytime if you need anything. 

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User Stats

195
Posts
76
Votes
Tony SanFilippo
  • Real Estate Investor
  • Littleton, CO
76
Votes |
195
Posts
Tony SanFilippo
  • Real Estate Investor
  • Littleton, CO
Replied

@Account Closed 

Congrats on the first Apartment building!!  Sounds like a great deal!

How did you finance the purchase and rehab? Hard money, private money, personal funds?

Also, how did you find this deal? Wholesaler, MLS, other?

User Stats

2,093
Posts
1,023
Votes
Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
1,023
Votes |
2,093
Posts
Peter Mckernan
Agent
Pro Member
#4 Rehabbing & House Flipping Contributor
  • Residential Real Estate Agent
  • Irvine, CA
Replied

@Account Closed Great insight! Thank you! I will reach out if I hit some walls.

  • Peter Mckernan
business profile image
The McKernan Group
5.0 stars
32 Reviews
Account Closed
  • Investor
  • Cleveland, OH
58
Votes |
150
Posts
Account Closed
  • Investor
  • Cleveland, OH
Replied

@Tony SanFilippo  

Took my partner and I some time to find a lender but ended up finding a small local bank that does commercial loans. Obviously the numbers are number one but they are big on relationships and working with people they trust so we sat down with the president, branch manager, and underwriter and sold ourselves. 

Found the deal on the MLS

User Stats

71
Posts
21
Votes
Grace Jordan
  • Brooklyn, NY
21
Votes |
71
Posts
Grace Jordan
  • Brooklyn, NY
Replied

Congrats @Rob McFarland! 

User Stats

1,635
Posts
1,363
Votes
Michael Le
  • Developer
  • Houston, TX
1,363
Votes |
1,635
Posts
Michael Le
  • Developer
  • Houston, TX
Replied

Congrats. You've achieved what a lot of people here are still hoping to do one day.

User Stats

161
Posts
31
Votes
Kaz M.
31
Votes |
161
Posts
Replied

Wow! That sounds awesome Rob. I will want to do that some day. Are there any KPI you can share?

Account Closed
  • Investor
  • Cleveland, OH
58
Votes |
150
Posts
Account Closed
  • Investor
  • Cleveland, OH
Replied

@Michael Le Thanks!

Account Closed
  • Investor
  • Cleveland, OH
58
Votes |
150
Posts
Account Closed
  • Investor
  • Cleveland, OH
Replied

@Kaz M. KPI are you looking for key performance indicators? We had set criteria we were looking for, most import was cap rate, current rents, and location.  The market we were looking in we set the minimum cap rate at 8%. We did not want a major rehab or renovation but we did want to find a property that the landlord was charging rents that were under competitive market rates. Location we wanted access to the major highways and not in a "D" or "C" neighborhood. 

My partner and I grew up in the area where we invested so it made it easier on us finding what we were looking for. 

User Stats

1,129
Posts
1,044
Votes
John Casmon
Pro Member
  • Cincinnati, OH
1,044
Votes |
1,129
Posts
John Casmon
Pro Member
  • Cincinnati, OH
Replied

@Account Closed Congratulations! Where is the 8-unit? Are you self-managing?

  • John Casmon
  • Account Closed
    • Investor
    • Cleveland, OH
    58
    Votes |
    150
    Posts
    Account Closed
    • Investor
    • Cleveland, OH
    Replied

    @John Casmon suburb outside of Cleveland, OH. I have a property management company that has been doing some great work for me. 

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    User Stats

    1,750
    Posts
    879
    Votes
    Matt Motil
    • Rental Property Investor
    • Cleveland, OH
    879
    Votes |
    1,750
    Posts
    Matt Motil
    • Rental Property Investor
    • Cleveland, OH
    Replied

    congrats bud! Happy for you 

    Account Closed
    • Commercial Real Estate Broker
    • Westlake, OH
    12
    Votes |
    17
    Posts
    Account Closed
    • Commercial Real Estate Broker
    • Westlake, OH
    Replied

    I know of 3-4 lenders in town that would be more than happy to assist you on transactions and/or refis when you get to that point. Feel free to reach out should you need a reference.