Hello Investor,
I am 20 year old investor that is very interested in eventually getting into commercial real estate. I was wondering if any investors out there with commercial property could give me any advice for getting into commercial property. How good a chance do I have at landing a 50 unit apartment complex? And what would be the best way to go about it?
Thanks,
Markus
First off, how much money do you have to get started?
10k
How good a chance do I have at landing a 50 unit apartment complex?With a total of $10k for a down payment and reserves......snowballs chance in hell. If that's all you have you're probably going to have to start smaller than a 50 unit building. I'd suggest you do a lot more research before even thinking about jumping into something that large. Also, if you are planning to start big like that you're going to have to start saving up some cash. You might want to start off in the 1-4 unit range and work up from there.
Is it true that the bank will do the financing, if the complex can cash flow every month?
No one will finance 50 units (especially in this market) without a good down payment and 6 months of reserves (6 months worth of principal, interest, insurance and taxes). Even if you could do 0% down $10k won’t cover the reserves on a multimillion dollar property for 6 months. $0 down and no experience managing rentals = snowball’s chance in hell of getting financed.
Hello malumu200,
Try Lease purchase option, :deal and you can use the 10k as a consideration payment.
Luiz
The problem I see with that idea is that if something happens such as a failure of a large HVAC system, etc he has NO money to fix it since his entire savings went into the option consideration. No safety net at all…
with a 50 unit apartment that sound be bringing in enough cash flow every month to support any fixer uppers?
Without a healthy bank account it won’t happen…
just out of curiosity…have you purchased any investment property before?
i think with $10K, you should follow Rich’s advice and start with something smaller and reasonably more manageable…
Commercial property is something I want to eventually move into. No I haven’t owned any commercial property. Has anyone here ever owned anything beyond a 4 plex. I want to get some feedback from an investor who actually owns something like a 40 to 50 unit apartment.
Around me 50 units is going to cost you $3mil+ retail, ask any commerical finance expert if you can get a loan with $10k in your pocket. WON’T HAPPEN!
I can recommend a couple of great books that really furthered my education.
The Best Damn Commercial Real Estate Investing Book Ever Written by Monica Villasenor (available on Amazon.com)
Confessions of a Real Estate Entreprenuer by James Randel
good luck
you said “eventually” right? the owner of a 50 unit apartment will tell you the same thing…start smaller and build up…
p.s. you said you haven’t owned any commercial property so i’m curious now…have you owned a 4-plex before?
I haven’t owned a 4 plex. I was curious for all the investors who own 4 plex and all this small complex have you ever tried to acquire anything like a 50 unit or do you know any investors who actually own a 50 unit. I don’t want to be a landlord!! I want to be an investor. So does anyone or you, yourself own a 50 unit? So I am basically asking all those investors who actually own something like a 50 unit. I appreciate all investors who have put in their 2 cents, but I would really love the chance to hear from those who are actually doing it!!! Who owns something like a 40 to 50 unit building.
Great quote on getting started investing when you’re young
“The young do not know enough yet to be prudent, and therefore they attempt the impossible— and end up truly achieving it, generation after generation.”
– Pearl S. Buck
I know, she’s a children’s author and not a real estate investor…but does that make my point any less true? Or any less relevant?
Be proud if you’re young as an investor!
Malumu, how did this work out my friend?
P.S. You found one
At 20 years old the last thing you want to hear is ‘take your time’, ‘start small’, etc. I know, I’m in my 20’s and hear the same stuff. The problem is, they’re right! I’ve been doing it for a few years and I still have bankers who say to be ‘slow down, you don’t want to look like you’re out of control in the bank’s eyes’, pisses me off to no end every time I hear it. Unfortunately no bank anywhere is going to loan you the money you need for a 50 unit building with zero experience, 10k in money (even if you got 100% financing), and so forth. It sucks, but the banks have a ‘sky is falling’ mentality and that’s how they approach lending money out.
Do you even know how to evaluate a 50 unit building to determine the value of it or what you’re willing to pay? I’d be interested to see if you have this basic knowledge. Good luck.
"The young do not know enough yet to be prudent, and therefore they attempt the impossible— and end up truly achieving it, generation after generation."
Great quote by the way!
This thread is six months old; however, it sounds to me like malamu heard one of Dave Lindahl’s webinars. Lindahl says things like “the sooner you get big, the faster you’ll grow wealthy”. He also touts that he has never talked to one of his tenants for over four years (except for a couple exceptions). He says you want to “be an investor” and “not a landlord”. The webinar makes things sound really simply and easy. I ordered his Apartment House Riches course (I knew it wouldn’t be easy), and now I finally have an idea of what to expect (for me, hundreds of hours of preparation) before I buy my first investment property.
I’m a 19 year-old with 18k currently in CDs. I have about $350-400/month of spendable income (I’m also a full-time college student). I think I’ll start off with some other kinds of deals to build capital and experience before plunging into multi-family houses. I’m looking at pre-foreclosures and assigning the property. Thankfully, I have some acquaintances on-line to help me and a brother who’s a lawyer.
Good luck with your future real estate endeavors, malamu!