Hello,

I am a recent college grad with very limited capital. I would like to find a multi-unit building that either cashflows or breaks even, and I would like to find a creative way to finance it that would require little money down. How do you locate potential income properties? Also, is there any way to get into one without a large downpayment? Any advice you can give this novice will be greatly appreciated.

Thank You!

recent graduate,
i deleted your double post and added the extra question into this thread.

when looking for income properties, you can hire an agent, look up "for rent" signs, distressed landlords, low CAP rates, cold call, mailers, property management companies, wholesalers, bird dogs, overleveraged investors.

when you find the property, its all numbers and money. when you develop enough knowledge and experience youll quickly figure out the difference between a good or bad deal within minutes. look up CAP, NOI, GSI, GRM, ROI(cash on cash), vacancy maintenance, repairs, reserves, and other variables. figure out your entry/exit strategy, how long youre going to finance the property, whether youre going to manage it yourself or hire a property manager.

heres a few creative ways to finance with little money down. i have more written down in my game plan but from the top of my head are:

credit partners
money partners
seller carry back 10-20%
master lease
subject to existing mortgage
tenants in common(TIC syndication)
partner with the seller

im still new in the commercial side and im learning something new everyday so feel free to ask a bunch of questions.

one thing im working on is learning as much as i can with TIC syndication(tenants in common). this investment vehicle is barely used and it creates opportunities to own a commercial property with fractional ownership. just think of it as owning shares in a company stock. each member of the LLC are shareholders and must vote unanimously on how to dispose or acquire a property.

im currently looking for an 8-15 unit apartment with my personal credit however when i find a 20+ apartment, retail, or parking lot, im going to try and utilize a TIC structure using little of my own money. this involves a specialized lawyer, SEC sponsor/trustee, land trust, and an LLC that can hold up to 35 investors contributing funds using their IRA, cash, equity, etc. property will either be held for 5-10 years minimum then either liquidate or do a 1031 exchange into a bigger investment.

Thank you, Alvin. I understand how to analyze a property, but I have had a hard time finding one online that will cashflow. I guess finding actual deals involves a little more legwork than I had thought. Do you use similar methods to locate emerging markets? Also, why would you look for properties with low cap rates? Thanks.

im developing a game plan to market and locate apartments using bird dogs and cold calling owners and property managers. ill try 2-3 strategies first and do test cases rather than doing a shot gun approach.

reason why id look for properties with low cap rates is because some might have bad management, below market rents, property might need a rehab, i can raise more income by converting an extra room into a storage facility or laundry room, or maybe a last case scenario would be a condo conversion and either wholesale each unit for a quick flip or retail it. im sure there are more factors and other angles to be looked at to raise cap rates but this is what ive read so far.

Agreed! Fractional ownership is a great investment vehicle, although it is not widely known. It minimizes your risk and reduces your upfront cost. It is almost like owning a company's stock. As long as you pick the right company (the right property), the return can be big in the long run.