Here are the five things you will need to do to take down your first multifamily deal:
1. Find a deal — You need to network with brokers. When you do, you need to convey the confidence you can actually close the deal (and get the broker paid!) It doesn’t always need to be through a broker, but they are often the source of many deals since the better ones are engaged with the multifamily community. Note that this step is harder than you think! You will go through 100 deals before you find one!
2. Analyze the deal — When you are looking to buy a property, you need cash flow. Do you know what to look for to find the cash? Are expenses way out of the norm for the area? Is there an opportunity to increase income? Do you know the terminology?
3. Build your Team — Unfortunately, you can’t build a team by reading books. The only way is to take action by connecting with people and specialists in your local multifamily space. This may include other multifamily investors, commercial brokers, professional property managers, title companies, or real estate attorneys. Not all will want to talk to you or even help you, but you must stay strong until you find ones that are willing to open a dialog with you.
4. Financing the deal — While it is expensive getting into a big deal, don’t buy based on your budget. Larger deals (let’s say buildings with 50 units or more) are typically out of reach for most people. Many don’t have the liquidity or net worth by themselves. This is why you partner with others.
5. Manage the deal — When you first take over a property, it will have it’s fair share of problems. This step is important as you need to work with the property management team you vetted and help them make the deal perform to plan. Your partners and investors are counting on you. Make certain your team is solid!
Like anything, before you start calling on brokers, you must educate yourself. You need to be around others with the same mindset and expand your think. You can do this, but it won’t be easy – unless you build a team!