How to finance a multi-unit property? Are you wanting to get into real estate
investing? Do you want to be an investor? Have rental properties? Get passive
income? But you don't really have a lot of spare cash laying around and you
don't know where to get it. Well, again, I was in the same boat. I'm
going to tell you exactly how to do it with no fluff. Let's go.
So, I'm going to give you a step-by-step guide on how to finance a multi-unit
property without any hassle, without any headaches and without getting tripped up
by lenders. I'm going to share with you 7 ways to finance a multi-unit
property and some secret ones that you probably haven't thought of. And I'm
going to give you my dirty little secret on how to get things done quickly.
Multi-unit properties are like the best type of properties when we are talking
about rental properties. And so many people have been asking me about, "Noelle,
how are you getting all of these rental properties? Should I be investing in
multi units? What does it mean? What are the benefits? Is it too much, okay?" So, I'm
going to break this down for you really quickly so that you know exactly why you
should be investing in real estate, why you should be vesting in multi-unit and
how to know when you're ready. So, the first thing of course is multi units are
properties that are more than one unit, okay? So, a 1 unit property is a house.
Most people just call it a house. But in the professional world, we call it a
single-family residence, okay? It's also known as a single-family dwelling or an
SFR. But when we are talking about multi units, it actually can fall into the same
category. It can fall into a single-family residence because they
consider 2 to 4 units still regular residential property, okay? So, if we're
talking about a multi-unit, we could be talking about a 2 unit, a 3 unit or
4 unit or we can be talking up to properties that are like small but there
are apartment buildings that have hundreds and hundreds of units. We're
talking about multi-unit properties, there's really no clear definition if
we're talking about in the single-family realm or if we're talking about in the
commercial realm where we're talking really big apartment complexes. But in
either case, there's some real benefits. When I started investing in real estate,
I started with single-family homes, okay? I was just finding houses people that
have property problems. I was getting those properties under contract and I
was flipping those contracts called wholesaling. Then I started fixing and
flipping some of those and started getting 50, 60, 70 thousand dollar checks
fixing and flipping. And then eventually, I started getting a lot of rental
properties and I quit my boring corporate job. So, that's my
story, that's what I did. But what I did not do that I'm encouraging more people
to do is start getting into multi-units a little bit earlier. Now, one of the
things that you can do with multi-units and why it is such a benefit for you is
I came into a lot of mistakes when I had my single-family homes. Each home had to
be managed individually. And so that became a really big expense, okay? You
needed a property manager for all of the different properties, you had utility
bills at all the properties. You know, sometimes taxes, insurance all of these
different things. But if you have a multi-unit, then all of those things are
for that just that one place. So, if you have a just using out it makes a small
multi-unit, just say a 4-unit, you know, just like this for unit that we're in
now, okay? This is a small apartment, there's 4 units, each of the units has
one bedroom, okay? Now, when you manage this property, one person can come manage
all 4 of these. There's one tax bill. There's one insurance bill. You get what
I'm saying? It's a lot easier to manage if everything is at one place. Now,
imagine if this was 4 separate houses that would be 4 separate tax bills,
4 separate insurances, 4 separate mortgages. It really starts to get out of
hand and it really cuts down on your profits. So, when you are able to get
multifamily units or multi units and you can have all of your tenants in one
place and all of your expenses at one place, it lowers your risk, okay? Because
if you have a single-family home and no one's occupying it, then you have
100% vacancy. But if you have a 4 unit and one of them is vacant,
then 75% of your units are occupied, okay? You only have a 25%
vacancy. And then you still have income from those other three units. Alright?
So, just a ton of different benefits to multi units. Additionally with a
multi-unit property, financing in many cases is a lot easier, okay? And I'm going
to get into that a little bit later. But just know that there's some tons of
benefits it's less risky, usually higher profits, usually less management. And last
but not least, you have the benefit of easier financing. So now we know why
we're doing multi-families, let's talk about how we're going to do it. So, I'm going to
give you 7 ways right now to finance multi-unit properties, okay? So, the first
one and I'm not going to spend a whole lot of time on this one because this is the
one that a lot of people might struggle with. But please stay to the end because
I'm going to give you the last one as the best one. Sorry about that but that's
what we're going to do. So, this one is actually one that I've use and took my
students still use. Private money. Private money does not have to be with your
friends or your family. It can be. And that is one of the things that I
recommend is you actually starting to find and create a network of people that
are interested in real estate investing. Because like I know there are tons of
people that are interested in real estate investing. The issue is most of
them don't know how or don't have the time. So, many people do have a retirement
account a 401K they may have a little bit of money safe. And they're willing to
invest it. Again, invest. Not just give it to you. Invest in real estate. Some
tangible income producing property. Most people are going to be interested in
that but they have to be able to trust that you know what you're doing. So, by
educating yourself, learning the lingo, learning the terms and learning what to
do with property, you can easily solicit private money. Do not think that you
don't know anybody because it doesn't take a lot of money. Most people have 40,
50 thousand dollars on the low end in their 401K. And you're only asking for
5 or 10 thousand dollars. In many cases, I've had multiple people pull out
a little bit of money from their 401K and we bought multi-unit properties. So,
just no private money is an answer, okay? So, that's private money as in people
that you know. And then there are private lenders,
okay? There's tons of lenders out there that are willing to do some short-term
financing or do some personal loans and things like that that can provide you
the money that you need either for the down payment or to fix up the property
and purchase the property yourself. So, know that private money is one of the
ways to finance multi-unit properties. Number 2, you can do equity partnering.
There's 2 different ways to do this and this is absolutely phenomenal.
Actually almost was resistant to give this
so early because so many people are going to be like this is the answer and
just run off and I don't want I want you to watch this whole video. But equity
partnering. I have a ton of students that do this now. What you can do of course
with real estate because it is a tangible thing and most people do want
to invest in real estate and they understand the business a little bit to
some extent, is you can actually create a business where you are going to purchase
real estate. Again just get an LLC or S corp. You just register the business,
doesn't cost very much money. And then when you are soliciting people to buy
into this, you can give them equity in your company, okay? You literally say, "Okay.
For this 10,000-dollar investment, you're going to own a portion of my
business. Whatever you know percentage you say. And you will split the rental
income with them, okay? This is a very easy way to finance multi units, okay? So,
for example, say, you are buying a 4 unit and it is considered a
single-family residence and there's tons of loans out there --Fannie Mae, Freddie
Mac, FHA where they will finance almost 97%, okay? The
loan is almost 97%. And you just put down 3 or 3.5
percent. So, you can literally get that money from one of your investors,
the down payment. And then you give them a portion of your business and you share
the rental income with them from those other units. And you're the one that's
going to manage the property, you're the one that's going to do the work. And in
many cases, you may even put the loan in your name but they provided the
downpayment. So, this is an awesome way to start partnering with people, getting
more people involved and teaches you how to start raising money and getting money
from other people start having those conversations and get more and more
people involved in your real estate with it is other people's money. That is
getting you your portfolio building. Number 3, hard money loans. Hard money
loans. Many real estate investors are familiar with the term hard money. But
I'll explain to you what it is really quickly. So, hard money loans are loans
that private lenders give just for real estate investors, okay? So, they do not
usually lend on properties that are just like a single-family home that you're
gonna live in. So, this is why it's perfect for multi-unit because if you're
buying, again, using our example you're buying a 4 unit,
even if you're going to live in one of the units and run out the other ones, a hard
money lender (of course you're not going to move into that one immediately) will lend
you the money to buy the property and in many cases, the money to fix the property
as well. And you just have to make interest-only
payments to them. And so, a lot of times with multi units, we fixed a lot of them
up. You know, we remodel them make them look really nice and modern. And so that
they can make a lot of money, okay? So, once you get the hard money loan, they
will literally loan you the money to do all of that. They will loan you the money
to purchase the property and to fix the property up. And then once you have done
those things, you refinance out of that loan. That is why it's called a hard
money loan because the interest rates are a little bit higher. You know, I'm
being honest with you. So, right now mortgage rates on mortgage loans are
like 3 and 4 percent. We're on a hard money loan. They're closer to 10,
12 percent in many cases and could be even higher depending on your credit.
However, they are a lot easier to get because in most cases they lend on the
deal, okay? They lend on "Will this property be making money? How much will
it be worth after you fix it up? What is your experience fixing up property?" If
you've picked fixed up properties before and you can document that, it is so easy.
Actually for me now that I've been doing this many years, it's so easy for me to
get hard money loans because they make a lot of money doing them because the
interest rates are high. So, just know that there is money out there with hard
money loans. So, that's another option. Number 4, house hacking, alright? So,
this is the example that I said before where you were buying 4 unit for
example and you were going to live in one of the units. Again, you can buy a 2
uni,t a 3 unit or a 4 unit pretty easily. Almost the same process as you
would buy just a single-family home. And so, if you're going to go through that same
mortgage process and they have those same loan terms where they will lend you
most of the money and you're only coming up with maybe 3% or
in some cases, you don't have to come up with anything. There are downpayment
assistance programs available. I'll give you a link to that a little bit later if
you want to look into that. But again, you can literally buy those homes with
almost no money out of pocket, okay? And you house hack because you live in one
of the units. And then the other units are able
to pay those mortgages off. So, that is a pretty easy way to finance multi-units
is by house hacking and literally living in one of the unit's. Because then you
can get financing at very high loan-to-value. Also known as LTVs where
they will loan you 97% or 100% or 95
of the mortgage. So, just giving you a quick example. If you were buying a
4-unit, it was just... Say a 2-unit. You were going to live in one and rent out the
other one. So, you're buying a 2-unit, it cost $100,000. Again,
just using round numbers. And you had to put down 3%. That would be
$3,000. Now again, there are downpayment assistance programs
available to even provide you that 3,000. So, literally you can buy a home
for a primary residence, live in one of the units and then the other unit, you
manage and collect rent on and it's able to cover your mortgage. So, house hacking
has become a lot more popular. But in my opinion still not popular enough. More
people are not doing this. And it is an amazing way to start getting multi-unit
properties and having properties that produce income for you. Loans. The next
thing of course the financed multi-unit properties are loans. You literally can
get mortgage loans from FHA, Fannie Mae, Freddie Mac. There's tons of mortgage
lenders that lend on multi-units. Now again, if you are going for 2 to 4
units, you will stick with the Fannie Mae, Freddie Mac, FHA government loans. If you
are talking about more than 5 units, you're going to be into a different loan
category. Again, Fannie Mae and Freddie does make loans on commercial real
estate. But the terms are a little bit different. And you usually need a lot
more down payment, okay? So, if you wanted a 10-unit apartment building for
example, even if you were going to live in one of the units, it would still be
considered commercial financing and you're not going to be able to just get
downpayment assistance and things like that. However, there are some real
benefits to those bigger units because obviously the more units you have, the
more income that you're usually receiving from those properties because
you have more units to rent out. So, finding the money and financing even
5 units, 10 units properties; 12-unit apartments is
not as difficult as you would think. In fact I have a whole video on how to get
financed for small apartments and I'll put a link below for you.
Number 6, finding for sale by owners and having them do seller financing. So, one
of the things that I've just love, love love about commercial real estate and
multi units and things like that is that of course, you have more units, okay? So,
you have the ability to already see that the property is making money. That is
such a big deal because if someone already has a rental property (for
example, okay?) where you seek out landlords, okay? Let me kind of break this
down for you. Where you seek out landlords, seek out for sale by owners of
multi units and they can finance the property for you, it's called seller
financing wherein they may be tired of managing the property. We have a lot of
older people that are getting out of real estate investing which is why I'm
trying to encourage more of you guys to get in it because we are going to have a
shortage pretty soon if more people do not learn this business and get involved.
We have a lot of older people, baby boomers getting out of it and wanting to
do something else or just straight-up retire but they don't want to just give
up all of their properties. So, many of them, tons of them actually don't want to
just straight out sell it. They want to do seller financing where they keep
getting some revenue each month, yet you are buying those properties or you're
buying that portfolio of properties from them. So, seek out for sale by owners of
multi-unit because many of them will do seller financing. You can talk with them,
you can deal directly with the seller, you can talk about what your terms are,
how you're gonna manage the property, what you can do, what your benefits are
and how you can help them in their situation so that they can retire. And
number 7, this is the granddaddy of how to finance multi-unit properties
today, okay? This is the fast way, this is the awesome way. Many people do not know
about it and it is real estate crowdfunding, okay? Now, crowdfunding has
become popular. You see people need money for the band or they need money for
their school. Well, those are those type of crowd funds. But we have real estate
crowd funds where you can literally go to
sites like trucrowd. And you can actually have your own crowdfunding
created where you go through and you solicit people to put in as little as a
hundred, 250 dollars, $500 whatever it may be.
They put that money in and you buy real estate with it. And you split the profits
with them. We literally have our own crowd fund
that we started. At the end of 2019, we didn't launch it until February of 2020
and we literally have over $200,000 raised. We've been able
to buy lots of properties and we're even doing quarterly distributions to our
investors. You can do the exact same thing. You can either invest in what
we're doing or you can emulate what we're doing. Go
to trucrowd and you can actually look up what we're doing. My company is NUUREZ.
N-U-U-R-E-Z INC. Nuurez Inc. And what we've done is we've created a crowd
fund. We've put it all together. Again, it goes through the Securities and Exchange
Commission, the SEC. You have to get vetted by the government and make sure
you don't have any criminal background or you're not a financially
irresponsible person. And you literally can get your own crowd fund started in
really a short amount of time. Like I said, we launched the company officially
in February. And at the time of this recording, we have well over $200,000
raised. Half of it... And I think over there's probably at this time
this recording is well over a hundred and some are thousand on the trucrowd
platform. And then we've gotten some private investments as well. And we're
doing quarterly distributions to our investors sharing the profits from our
real estate. So again, you can do this too and this is the new way to raise money
for investments. It's a new way to invest in real estate and the new way to start
making money in real estate. So, hopefully I did not overwhelm you with all of that
information and this was really great content for you. Again, just want to
please remind you to go check out trucrowd.com and go check out NUUREZ,
N-U-U-R-E-Z, ".com". We are buying multi-unit properties and we're litter
making them short-term rentals. So our profits are through the roof. We are
expecting to make a lot more money than we did with normal rental properties. You
can read and see all about what we're doing, how we're allocating the funds,
what our plan is and what we're doing. And again, you can invest in NUUREZ or
you can emulate what we're doing. This is Noelle. To your success.