Funding Options for Multi-Family Residential Properties
Started by InvestorMan
about 17 years ago
Posts: 135
Member since: May 2008
Discussion about
Hello everyone. I am writing to pick some brains and get some ideas about funding options for multi-family residential properties. I dabble in investing, mostly stocks, and I have been looking to find ways to diversify my assets. Since real estate has always been an interest of mine, it is only the next logical step to add some to my portfolio. My main goal is to begin allocating rental properties... [more]
Hello everyone. I am writing to pick some brains and get some ideas about funding options for multi-family residential properties.
I dabble in investing, mostly stocks, and I have been looking to find ways to diversify my assets. Since real estate has always been an interest of mine, it is only the next logical step to add some to my portfolio. My main goal is to begin allocating rental properties in NYC; mainly Manhattan.
Of course, there is the first hurdle of obtaining the financing. I have excellent credit (above 800) and I have investment funds; although, not likely enough for a Manhattan property down payment. However, I work for the city, so my income isn't likely enough to have the bankers throwing money at me, and I am not looking to wipe out a large part of my stock investment capital by putting it all in real estate.
I've been looking for other options, but I've not been able to find anything too concise. So, I wanted to see if anyone here might be able to provide some information.
This isn't a pitch, so please don't take it as such. I am just interested in information on ways to pool capital from other investors.
I know some of the options; angels, setting up a REIT, forming an LLC, etc., but I do not know the pros and cons of each or if there might be some other ideas. I'm not looking to become the next Trump or Tishman-Speyer, as I really enjoy my city employment and will continue to be employed there, so I am not looking to make it a vast empire. Of course, if I'm successful and prosperous, I certainly won't mind :-P.
I'm mainly looking for ways of getting my foot in the door and beginning to allocate income-producing properties so I can diversify my portfolio; as well as get a little bit of a chance to get more into my hobby.
Any information is greatly appreciated. Thanks for your time.
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Response by manhattanfox
about 17 years ago
Posts: 1275
Member since: Sep 2007
My first thought is in order to make in income producing property worthwhile, you must start at the point where the analysis shows that it is as cheap or cheaper to buy than to rent... Patience, Grasshopper. My uncle and a bunch of neighbors formed an llc and allocated shares into an LLC and picked up 5 oceanfront homes in carmel, CA in the 1970s when everybody thought the ocean homes were on the brink of plummeting into the ocean. Over the years -- the homes have not only soared in value, but have provided excellent rent money income. Thay have been repaid the original investment many times over and have nice ongoing income.. The shares have rights of first refusal and have been in the familes and onto kids/grandkids, etc.
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Response by InvestorMan
about 17 years ago
Posts: 135
Member since: May 2008
Thanks, Fox. I am certainly being patient. I believe things will get much lower and much darker before this is all over. I just can't see how we can have so many job losses in the financial industry (that are not being replaced by equally high paying jobs in another industry) and so many new apartments coming on line that will likely have to be converted to rentals, while NOT experiencing a severe downturn.
But, it takes time; and I've got plenty of it. Still, just want to start getting information together.
Thanks for the input on your uncle. So, he formed an LLC with his neighbors and then they divided the shares? This is something that, from what I have found, seems to be the best way. From what I gather about the REIT approach, I'd have to go through the SEC and, well, that seems to be WAY over my head to start out.
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Response by fakeestate
about 17 years ago
Posts: 215
Member since: Nov 2008
My two cents: to what extent is your employment with the city dependent upon the vitality of the city's real estate market?
In other words, buying real estate in New York City may not have the diversification benefit you hope. Or maybe it does. But I would think about that before going ahead.
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Response by fakeestate
about 17 years ago
Posts: 215
Member since: Nov 2008
The other thing I would do: no matter what information you get on this board solicit the opinions of a good attorney and accountant experienced in these types of deals before signing anything. Presumably you already know that.
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Response by InvestorMan
about 17 years ago
Posts: 135
Member since: May 2008
Agreed, Fake. I am just looking to get some direction about where to start gathering information. After some ideas are formulated, then I'll most certainly be soliciting the help of some professionals.
My city employment is, well, dependent on the current market for now, as I am a fairly recent hire and the low man on the totem pole. If the layoffs occur that they are talking about and, honestly, I think might be inevitable, I could be without employment for an unknown period of time. On the plus side, I am a guaranteed rehire before any new testing is done, once the money is available or manpower drops enough to merit new bodies.
However, if I am not laid off, my job security is pretty stable. I am not looking to get myself into a financial mess by jumping right into this, so I will certainly be waiting to make sure my income is secure and the market has begun to settle before buying. I've learned my lessons in the stock market about trying to catch falling knives and believe the same principle applies to real estate.
My first thought is in order to make in income producing property worthwhile, you must start at the point where the analysis shows that it is as cheap or cheaper to buy than to rent... Patience, Grasshopper. My uncle and a bunch of neighbors formed an llc and allocated shares into an LLC and picked up 5 oceanfront homes in carmel, CA in the 1970s when everybody thought the ocean homes were on the brink of plummeting into the ocean. Over the years -- the homes have not only soared in value, but have provided excellent rent money income. Thay have been repaid the original investment many times over and have nice ongoing income.. The shares have rights of first refusal and have been in the familes and onto kids/grandkids, etc.
Thanks, Fox. I am certainly being patient. I believe things will get much lower and much darker before this is all over. I just can't see how we can have so many job losses in the financial industry (that are not being replaced by equally high paying jobs in another industry) and so many new apartments coming on line that will likely have to be converted to rentals, while NOT experiencing a severe downturn.
But, it takes time; and I've got plenty of it. Still, just want to start getting information together.
Thanks for the input on your uncle. So, he formed an LLC with his neighbors and then they divided the shares? This is something that, from what I have found, seems to be the best way. From what I gather about the REIT approach, I'd have to go through the SEC and, well, that seems to be WAY over my head to start out.
My two cents: to what extent is your employment with the city dependent upon the vitality of the city's real estate market?
In other words, buying real estate in New York City may not have the diversification benefit you hope. Or maybe it does. But I would think about that before going ahead.
The other thing I would do: no matter what information you get on this board solicit the opinions of a good attorney and accountant experienced in these types of deals before signing anything. Presumably you already know that.
Agreed, Fake. I am just looking to get some direction about where to start gathering information. After some ideas are formulated, then I'll most certainly be soliciting the help of some professionals.
My city employment is, well, dependent on the current market for now, as I am a fairly recent hire and the low man on the totem pole. If the layoffs occur that they are talking about and, honestly, I think might be inevitable, I could be without employment for an unknown period of time. On the plus side, I am a guaranteed rehire before any new testing is done, once the money is available or manpower drops enough to merit new bodies.
However, if I am not laid off, my job security is pretty stable. I am not looking to get myself into a financial mess by jumping right into this, so I will certainly be waiting to make sure my income is secure and the market has begun to settle before buying. I've learned my lessons in the stock market about trying to catch falling knives and believe the same principle applies to real estate.
Thanks again for your input.