My questions is this- is it good idea for someone brand new in investing to purchase a multi family commercial property, anywhere from a 4 unit up to a 30 unit?
I am leaning towards this for a few reasons. First, I would like to see a decent cash flow on something I buy. I am nervous about single family homes, as multi units bring in multiple income streams.
Second, I need some cash flow to maintain my new living situation, I am moving to a new city with a 4 year degree and being in business for myself for most of my life , I don’t really think I am capable of getting a “job”.
And thirdly, I have a set amount of money for a down payment. I would like to leverage it to maximize cash flow.
Would a partner be a good idea to help out with the DP as well, or just to take some of the pressure off me of owning/maintaining such a large investment?
I am thinking of an apartment building in the high 6 figures. I am in texas , so these are readily available in the area where I am moving.
Any advice would be greatly appreciated. Thankyou.
There are some items that you need to consider.
Most lenders are going to want at least 20 percent down and may want as much as 25 or 30 percent down. Are you going to be able to afford a low to mid six figure down payment?
Do you know how to value an apartment complex? How would you go about determining if you were paying wholesale or retail for the property. Are the external factors that would affect your property positive or negative? Can you afford to make a mistake and lose it all?
Do you know how to operate an apartment complex? Will you live there and be the management or will you hire a management company? Have you lived in an apartment complex at some time in your lifetime and what did you like/dislike about the ones that you lived in. Can you improve the operations of the property that you buy?
These are just some of the things that you need to think about. I am not trying to discourage you from jumping in feet first, I just want to make sure that you can swim. I personally want to buy an apartment complex to become my retirement income (in several years). I am in the process now of looking at some properties, but I have been planning to do what I am doing now for several years to learn what I need to know about them.
Thankyou for responding. Depending on how high in the six figures the building is, maybe at 10% down.
I have no clue how to value an apt complex. I would look at comp values , rental rates, schedule E of the owner, and all previous tax rolls associated. Not too mention the appraisal and doing a thorough examination of everything associated in/on around the property ( external buildings, apt building itself, etc).
I am thinking about looking at something really no more than 20 units, I think that will definately keep my hands full. yes, I plan on living there for now anyway. And I have lived in several apt complexes so I can gather some of teh amintanance issues . what i didn’t like about the ones I lived in is that they were all old and run down
(being in a college town in my area, these were very common).
I can’t really afford to lose everything, Id be back to square one.
I’m just not sure what to buy to maximize my investment and gain the greatest return with what I have to invest all at the same time needng someplace for myself to live in as well.
Any and all help is greatly appreciated. Thanks
you need to first read this book.
What Every Real Estate Investor Needs to Know About Cash Flow…And 36 Other Key FInancial Measures: Guidelines, Formulas, and Rules of Thumb for Making Money in Real Estate
then you need to learn about apartment complexes. living in one does not qualify you to own one. i would suggest you learn by renting out a few sfh’s. you can buy sfh’s with zero down. for apartments you need atleast 20% down.
I have to agree on the book “What Every Real Estate Investor Needs to Know About Cash Flow” it’s a good book.