What is the best to get started in investing in apartment buildings?

New to investing but I have been researching it for a few years.
In General Area - Asked by Merrill A. - Nov 10, 2010
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Answer(s)

Devin C. G.
Broker/Agent
Irvine, CA

First, define your goals; Research your preferred market and know who your potential renter base is comprised of. Make sure you have access to adequate capital to invest in a property, typically 30% down. Like any RE investment, if your not buying all cash, speak to a lender to make sure you can qualify for the loan on a basic level. Select a RE investment professional who specializes in multifamily (apartments) and as what you need to do in order to be considerd a serious client by them. Thats a good start- Hope that helps

Nov 10, 2010
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Rob B.
Chandler, AZ

Merrill....
Your simple question requires a lot more information for one to provide a meaningful answer. However, I will provide you some guide lines:
1. Know the market you want to invest in.
a. What are the specific neighborhoods in the area?
b. What are comparable rental amounts in each neighborhood?
c. What are comparable prices per unit and what cap rates for the market?
d. What are vacancy rates and how much are replacement costs for new
buildings?
2. Know how much capital you have to invest and what kind of leverage you can
use in loan amount to down payment.
3. Know what it is going to take to manage the size property that you intend to
purchase.
4. Have some idea on the holding period for your asset and think through what
your eventual escape plan may be.
And, most importantly don't get in over your head before you are ready. If you believe you can handle 10 units for example, settle for 6-8 to start with and keep some capital in reserve. If you can handle 40 units as a forward example you might consider going for 25, while maintaining a solid capital position.
Lastly, time your entry into the market. For example right now may be a good time to consider such entry since prices are relatively low and buys quite good, depending on the particular multifamily product you choose. Also, banks are requiring less leverage, so your holding position will be more solid. Later on when the market heats up you may choose to refinance your asset and use the excess funds to purchase a few more additional units.
In summary, generally, the people that I have seen do really well with multifamily are those who buy and hold, ever increasing their portfolio.
Good luck Merrill.....
Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855

Nov 10, 2010
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Lisa A.
Owner/Investor
Phoenix, AZ

I agree with everything that Rob said. In addition, if you are just starting out and lack:
1. Experience in the market
2. Excess money for down payment
3. Knowledge of market research analysis and emerging markets
then I would say you should also consider looking into investing with a real estate investment firm. That way, all of the work is done for you, contract negotiations-due diligence-financing-etc. All you do is invest your money with the firm into a particular project they may have available. That way, you begin to grow your portfolio and knowledge at the same time. Most real estate investment firms require a minimum of 50-100K and are reserved for accredited investors, but others like ours, have a minimum of 25K for any type of investor. Best of luck!

Nov 17, 2010
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Michael G.
Owner/Investor
Houston, TX

Devin, Rob, and Greg, great piece of information shared, this helps me out alot. Thanks Merrill for the posting.
Mike

Nov 22, 2010
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Jamiel C.
Owner/Investor
Richmond, VA

You don't want to invest in apartment buildings, rather, you want to build a business that invest in them on your behalf. Don't be fooled, the big boys are not out there, looking at properties, analyzing deals, and raising capital, they have people, systems, and technology in place to do it for them. Robert Kioyosaki wrote, ''People who invest as individuals, always get slaughtered by those who invest as a team". Even if you cannot hire staff to do this for you, develop a business identity, and begin passing out your card at real estate networking events. Make it look like you have been doing this for years, but tell them you just started. You will be surprised at how many professionals will begin to help you free of charge,-this covers your people. Next, you want to continue learning about the industry. While I don't want to market the gurus, because they can do it themselves, just remember knowledge is a considerable advantage. Even if you cannot afford their curriculum's, sign up for their free newsletters, and begin studying the topic online. Also, check out www.Multifamilyexecutive.com, as it will keep you up to date on what the big boys in apartment investing are doing, and hopefully, you can adopt some of this yourself. Use the featured, technologies, and tactics they recommend, as it will add to both your professionalism and success in the business. That covers systems. And finally get started. You may not have collateral so banks won't want you, go to private investors instead, loopnet can help. These investors will qualify you based on the property, and whether or not you gel with them personally, unlike banks, who will simply look at your business history and down payment amount. Use the internet to search and network with investors, be honest with them, and ask if they offer 0% financing, explaining to them that you are just getting started, and willing to take whatever piece of the deal you can. Maintain healthy correspondence with them, and be sure to project yourself as a business, while being honest with them that you are just starting at the same time. The book, '' The Ultimate Marketing ToolKit" by Paula Peters really helped me here. Finally do not give up. Continue to build the business, even when you are not getting deals, this means you keep your name out there, and develop credibility, it means you continue to learn, and develop your skills, and do whatever it takes to get started because as they say, the first step is the most difficult.

Nov 22, 2010
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ian l.
Broker/Agent
London, LN

Hi Merrill,
Real estate investment can be done passively or actively, over the long or short term and with residential or commercial property. There are four broad types of income-producing real estate: offices, retail, industrial and leased residential. The key criteria in these investments that we are focusing on is that they are income producing. Using a good estate agent service will also help you in making a profitable investment. There are many good estate agency sites present on the Internet which help in finding valuable investment options.

Apr 22, 2013
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