I have helped many investors buy their first income producing property. I really enjoy opening the world to beginning investors.
One of the first and probably the most key steps is to decide how are you going to pay for this. FIRST word of caution is to NOT buy into these so called Gurus of Real Estate on how you can “find” a property and the larger investor is going to let you be a part of the deal and have you manage the deal for a piece of it! Really why would an experienced investor use a novice to help them buy or even find real estate investments.
You need your own funds to do this. If you are going to leverage and you should, you need to get qualified! It is very like qualifying for a home. This would apply to tenant occupied 1-4 units. I do not recommend going to your favorite big bank especially in another state. Number one you will be trying to fit a square peg in a round hole. Use a local lender that is attune not only to small multifamily but also the local market. Plan to have 25% down and 6 months of reserves. The process should take approximately 30-35 days from contract to Close of Escrow.
If you are purchasing in your IRA, this must be in a self directed IRA. To move this to an self directed IRA takes about 3 weeks.
If you are choosing to purchase 5 units or more (or other kind of commercial real estate) you will need a min. of 30 percent down and 5% of reserves. You will also need an entity to hold the property in.
I caution that all your investors seem to want 100 units. While this can be attainable, please set your goals realistically.
- Set your goals
- Choose the KIND of property that you want to own
- Get qualified
- Now go shopping
Remember to give me a call if you have any questions-I answer my cell 602-688-9279