Where to buy multiple-unit properties?
Are you ready to get a multiple-unit property?
Do you want a multi unit?
You want to start making some passive real estate income?
Well, I'm going to tell you where to find the best most profitable multi-unit properties.
Let's go.
When we first talk about multi-unit properties, you really got to find and let you know that
there really are 2 types of multi-unit properties.
We have single families that fall into the residential type of category which can range
from a 2 unit, a 3 unit or 4 unit.
Otherwise known as a 2 to 4 unit.
And then on the commercial side, we have 5 units and up.
So, when we're talking about multi-unit properties, we really got to decide which one of those
2 types of properties are you going to focus on.
And for the purpose of this conversation, I'm going to give you some tips on how you
should know which ones you should be focusing on.
But just so you know, they are treated differently when it comes to financing.
And they are treated differently when we are talking about how we will manage them and
how lenders see those properties.
So, kind of start to think about it for a second when we say multi-units, think about
start talking about and deciding how many units you want.
Do you want 2 to 4 units?
Or are you looking for a small apartment building that has maybe 6 units or 8 units or 10 unit?
Or we can be talking about complexes as big as 100, 200 units.
Those massive apartment complexes that we see.
But you have to know before we even get in to multi-units, there is a difference between
anything less than 5 units and everything over 5 units.
So, when we're talking about getting 2 to 4 unit, that's where we're going to start.
Because I want you to start small but I want you to grow big.
For the purpose of this conversation, I want you to go ahead and think about finding 2
to 4 units.
And I'm going to tell you how to find them.
So, when we first talk about 2 to 4 units, like I said, those are considered residential
real estate.
So, you can look on normal websites like Zoillow, Red Fin, Realtor.com.
Basically, websites that fill in from that local MLS.
Do you have a real estate agent or you working with the real estate agent, all of the properties
that are for sale in the retail market are put into a system called MLS which stands
for multiple listing services.
And the websites like consumers like you and I may go to to find properties or properties
that are for sale, they pull in all of that data from the MLS.
And they show a version of that to the general public.
And that is the first place where you want to start your search.
If you are a first-time home buyer, I strongly suggest you start with multi-units if you
can.
Even if you don't have any properties at all, you can start being a real estate investor
just by getting a 2, 3 or 4-unit property.
Because you live in one of the units and you can rent out the other units.
This can provide you with your first experiences as a real estate investor.
You can get great financing from most banks and lenders.
They'll give you all kind of programs for being a first-time home buyer.
And you can get started on the right track if you so choose.
I'm also going to take a moment to say if you're interested in being a real estate investor,
you're probably loving the information that I'm giving you.
So, please take a moment and subscribe to my channel and make sure you click that little
notification bell so I can keep bringing you content like this every single day.
So, now let's talk about bigger apartments.
Bigger units.
5 units and plus.
Like I said, even if you are a first-time home buyer, you never had a property at all,
yes you can invest in small apartment buildings.
You can actually invest in really big apartment buildings with no experience.
As long as you have the money and you're able to find a financing, they will sell it to
you.
But let me tell you where you will find those properties and how you can best do it.
So, one of the things when it comes to multi-unit properties, talking 5-units and above, those
are considered commercial real estate.
Apartment buildings are considered residential, obviously.
Because people live there.
It is their residence.
But is also defined and classified as commercial.
So, when we are talking about commercial financing, that process is a little bit different than
financing a 2 to 4 unit.
As I mentioned before the 2 to 4 unit is a little bit easier.
The 5 unit isn't hard...
Don't get me wrong.
There's still a process.
But usually what happens is you need a little bit more money downpayment.
So, at most of the commercial financing for apartment buildings and things like that,
you're usually going to need 20% down.
And let's just say this property was one million dollars.
We're just going to use a round number.
If you have to put down 20%, that will be $200,000, okay?
And they would give you mortgage for the other 800,000.
And you will go for there.
But when it comes to finding these properties because that's what this video is about.
And you want to go forward, you want to start on a website called loopnet.com.
Most of you are commercial residential real estate.
Your small apartment buildings, your apartment buildings, your income producing properties.
They're not usually listed to general public in Zillow.
Now, yes.
Real estate agents can sell businesses and they can sell income producing properties.
But usually in the MLS, that information does not transfer to the general public just outright.
So, where you can find a site for like a regular person, just a regular normal person without
a real estate License, you can go to loopnet.com.
But on loopnet is going to be a little bit of confusing.
There's 3 different categories and you want to fill out the office buildings for example.
The medical centers for example.
The stripmalls for example.
All of the commercial real estate is listed on loopnet.
So, unfortunately, you're going to have filter out all of the things that not the multi-unit
residential proerties that you're looking for.
Now, when we're talking those large scale properties, I'm going to give you just one
quick thing.
Again, 5 units and up.
You want to start looking at different things.
And you probably would with the 2 to 4 unit.
With the 2 to 4 unit especially if you're going kind of "house hack" and live in one
of the units and then rent out the other units, you're not going to be as concerned with how
much money the property is currently making.
Now, yes.
That is important.
You want to see that the other units are occupied and how they're managing, how much the property
is making.
That is important.
However, it's not as important as when you are buying a big large scale apartment building,
okay?
So, if you're buying 5 units or above, you're really going to have to educate yourself and
know and understand things like caprate, okay?
That's the capitalization rate.
That is the relationship between how much you are paying for the property and how much
income the property is bringing in.
With the caprate, the big part of the equation is the net operating income or NOI.
And that is how much money the property is making on a monthly basis minus the expenses,
okay?
So, not including the mortgage but...
You know, the property management fees, the utilities, things like that.
The monthly expenses of it minus the mortgage debt, okay?
The caprate is not trying to confuse you with the debt, okay?
You don't want to take consideration the debt.
You really just want to look at the relationship between how much you're paying for the property
and how much money the property is making.
And so, I'm not going to you a whole long scene here but just explaining to you really
quickly.
It's just a quick formula where you divide that operating income by the purchase price
and that will give you the capitalization rate.
And for most properties, you want to capitalization rate between 5 and 10 percent.
And when we're talking about commercial residential real estate, be very careful and know that
there's a lot of options out there.
So, don't think that this is something that you can't do.
When people tell you, "Oh, no.
It's too hard.
You can't do it."
There's a lot of financing options out there the same way that they are for residential
properties like 2 to 4 units.
In fact, with properties like large apartments that already making money, the lender will
look more at how well the property is doing, how much the property is making.
More so, than they will look at you and your credit.
So, there's definitely some benefits there.
So, I have created an entire 3-day training program that I would love to invite you to.
It is called the GROW YOUR WEALTH event.
Please go to growyourwealthevent.com and learn more about the training class that I'm having.
You fly out directly to me.
You spend 3 full days with me training you.
Again this is limited.
We don't have a lot of people there.
So, please get you tickets early.
I want to train you for 3 full days.
Show you my properties, show you exactly how it's done.
So, at the end of those 3 days of full learning, you can leave with the plan on what to do
for real estate investing.
I would love to meet you, see you on person, answer your questions in person.
This is Noelle, to your success.