How to buy multi-unit properties? I get this question all of the time. "How
do I do it, Noelle? How do i do it?' Well, I
definitely know the answer and i'm going to share it with you.
Let's go.
So, you're interested in buying multiple unit properties and you are definitely
on the right track. Multi-unit properties are one of the
best real estate investments around right now.
i'm going to tell you why. I actually started investing in real estate but i
did not start with multi-units. I literally started with single-family
homes. And one of the things that I've now started to do over the past couple
of years is sell off a lot of those single family
homes for multi-unit properties. And the reason that is is because it
really gets pretty expensive managing properties one by one by one. As
you can see, multi-unit properties allows you to rent
and have one place have multiple tenants. It lowers your risk,
okay? Because if somebody is not able to pay or you have to evict someone
and you have just one house and that one tenant is not there,
you have 100% vacancy, okay? That means you're getting no money.
But if you have a four unit and only one of those units is vacant,
then you have 75 of your property occupied. And that's you're getting
most of your money. And so, that's one of the reasons that you really want to get
into multi-unit properties and probably one of the reasons why you're watching
this video right now. So, let's get to it. So, when we're talking
about multi-units, we first have to define
are we talking about 2 to 4 units or are we talking about
major apartment buildings, okay? And i'm going to tell you the difference really
quickly. So, if you get a 2 a 3 or a 4
unit property, that is still a multi-unit property.
However, it is considered residential real estate
and you can get regular residential financing in most
cases. So, you can really start to get a
multi-unit without having to come up with a big down payment,
without having to have super good credit. So, basically just
basic mortgage qualification is really all you need to get a 2 to 4 unit.
Not much different than it would be buying a house, okay? The process is
pretty much the same. The money is pretty much the same.
Everything is pretty much the same. There's a little few caveats but not
that many differences. But when we are talking about 5 units
and up, we are now into commercial residential
real estate. So, the more units you have, sometimes it does
really reduce your risk. Getting financed for those 5 and up
units has different caveats. It's a whole different system
but it's not hard to get financed for apartment buildings. Many people think
that it is because you need more money. But they're a lot more lenient about
where some of the money comes from. And many times you can do a lot more
joint ventures and have more people involved in the transaction
when you are buying an apartment building versus buying
1 or 2 houses, if you get what i'm saying.
Totally need to decide which one are you going to go for.
I'm going to give you some hints. If you haven't purchased the home before,
you're kind of new to this, I suggest staying on this side of the lane
2 to 4 units. But i'm going to give you some great information on 5 and
up because there's some good stuff there
too. So, when we're talking about buying 2 to 4 units, you will find those
properties pretty much the same way that you find
single family houses. You will go to Zillow, Trulia,
realtor.com. You'll find a realtor pretty much the same process. So, when you do
your search you want to just make sure that you are
filtering for duplexes, triplexes or quadruplexes if you're looking for
multiple units. And exclude all of the single family
homes the condos the townhomes and things like that.
Now, if you are going to look for five units and up,
you're going to have to use a website called loop net. That's probably the best
place to find commercial real estate and then you're going to filter out all of
the office buildings the medical centers and things like that
and just look for residential commercial real estate. So, that's how you're going
to start your search. The next thing when we are talking about
buying multi-unit properties is using other people's money.
Again, you can find plenty of them on the website that i gave you, loopnet.
Or you could even give our office a call at 888-479-4542.
So, that'll give you some information on how to quickly find those properties.
So, once you have financing in place and you've decided whether you're going for
a 2 to 4 unit or a five unit and you are looking for lenders and
you've now decided which category of lender,
you want to find who is going to give you the best terms
for what you're looking for. Now again, if you're going to the 2 to 4 unit,
that is residential real estate. There's some awesome mortgage programs out there.
There's even some down payment assistance programs out there to help
you with those purchases. So, contact your local lender and start
looking into that. If you are looking to do a bigger
apartment complex 5 units and above, you have a myriad of options for your
down payment. Because in most cases you're going to
have to put down 20 with most of the loans for commercial
lending, but the great thing about commercial financing is that they allow
you to be very creative. You can pull your money with different
investors. You can do seller financing. There's a lot of different options out
there programs are always changing. But they're looking for people that are
willing to manage the properties and have some
experience and want to do this. So, don't hesitate to reach out to those lenders
that you find on loopnet and see what they have to offer. And then
last but not least when it comes to buying multi-unit properties,
you need to review the documents, okay? So, especially if we are talking about
buying an apartment building, we're talking about
5 units and up. You want to see what the rent rules were.
How much are people paying, what did they pay. Let me see a spreadsheet, let me see
the records, let me see what people have been paying.
How often are they paying? When are they paying? How often? Is anyone delinquent?
Are there any vacancies in the property? In some cases, if all the units are
occupied, sometimes that means the rent is too
cheap. So, you want to see this information. And then last but not least
they have something when you're buying commercial property,
called T12. And basically that just stands for trailing docks for the past
12 months. And that's where the owner of the
commercial property, that apartment building,
they have to give you those last 12 months of records. You need to see
all of what happened, all of the expenses, all of the vendor,
bills, all of the invoices. What did they spend money on what did they do for
the past 12 months. You want to see all of that
documentation. So, if you would like more information about real estate
investing, I have created an entire course for free just for you. Just go to
noellesfreetraining.com. And check out a free training that i made just for you.
It's a full course. It's probably a little over an hour long.
So, I couldn't really upload it here to this YouTube. But
it's for you and I want you to check it out so that you can get all of the
information, the knowledge and things that you need to be successful.
This is Noelle. To your success.