April 8, 2014
In an article posted last week, "Due Diligence for Apartment Financing—A Lifeline for Success in Owning Your Apartment Complex," we covered how vitally important it is to do due diligence in acquiring a multifamily loan. We also mentioned how important due diligence is in all steps of acquiring and owning an apartment complex.
You would be surprised to know how many loan inquiries we get from people who know next to nothing about multifamily properties. They have no idea what it takes to select, finance, and run an apartment complex. Their attitude is that they are going to purchase something with little or no money, and that they are going to get rich with very little work. Plus, they think they need to know next to nothing about multifamily properties and multifamily financing.
Quite a few don’t know that owning a multifamily complex is running a business. I tell them that if you want to run a restaurant, you have to be knowledgeable about running a restaurant. If you want to run an accounting firm, you need to be knowledgeable about running an accounting office.
However, an essential part of knowledge is experience. You can read about flying a 747, but those who actually fly a 747 have extensive experience – some pilots have 20,000 hours flying experience.
If you are new to the area of acquisition of multifamily properties, mentoring is very important. You need someone to guide you through the entire experience – from selection, to finance, to ownership. It may be that you form a partnership with an experienced multifamily investor. You put down 50% on the property, and the experienced partner tells you the steps and involves you in the steps.
Other things you can do are to become part of a multifamily investment organization. You can take courses in multifamily investing. Of course, you need to do due diligence in selecting the courses. You need to sort through the poor choices and look for good choices. You’ll need some guidance to do that.
Happy apartment selecting and financing,
Bruce Painter, Director of Marketing, Business Loan Store