Multifamily properties are costly, which causes most investors to shy away from them. However, these properties can bring a good amount of cash and a strong return if appropriately managed. The buying price should not be a barrier to acquire multifamily apartments. Discussed below are several ways you can finance the acquisition of such property.
Private money lenders are not only used when acquiring single-family houses. They can be helpful too if you want to invest in multifamily apartments but lack the down payment. Private money lenders do not have to come from an investment firm. Your friends, family, or colleagues can also be a source of private money if you convince them enough of the returns they will be getting from the investment.
in equity shares, the investor gets a portion of the equity of a property in return for the funds you need for the multifamily apartments. For instance, if you are getting $200,000 from an investor, you give them a 40% share of the property’s equity. That means when you rent the property or decide to sell, the investor will be getting 40% of the monthly cash flow or 40% of the total amount received from the sale.
Hard money lenders let you borrow money depending on the value of a property rather than your credit score. The interest rates and the original fee are also higher than your traditional mortgage loan. Therefore, before you approach a hard money lender, find a multifamily property that shows promising returns.
You may find a property that contains valuable natural or manufactured resources, which you can sell upon purchasing a property to help fund the down payment. Such material includes timber, fertilizer, gravel, plant, or any resource that can be useful to a third party.
Crowdfunding is raising funds through multiple investors, each contributing a small amount rather than one huge investment. You will need to have a solid pitch to attract various investors.
Multifamily apartments come with their advantages and disadvantages. For instance, one advantage is that you have a recurring source of income. A disadvantage is that management of such a property can be time-consuming, requiring one to hire a property manager, leading to extra costs. If you are interested in investing in multifamily apartments, reach out to Evolt Capital, and discuss your options with them.