Set Your Goal: to purchase your first apartment in 90 days. In general, this plan is for buying cash-flowing, income-producing apartment investment with built-in equity.
Do Your Market Research: one of the most important rules on where to buy apartment buildings is to buy where there are JOBS. If there is an absence of jobs and job growth, there will be an absence of persons to rent to. If you have no one to rent to, your apartment investment will likely fail. The easiest way to gauge a healthy job climate is to call your local chamber of commerce and get connected to the economic development department. Within this department are all the statistics you’ll need to see what the current unemployment rate is as well as what the future holds. I like to get info straight from the street as well. I’ll call several local property managers and ask them the question point blank: “how’s the job market today?”
Start In Your Own Backyard First: I suggest starting your market research and having an intention on investing in your own city first. It is by far the easiest and most efficient way to begin. Investing out-of-state for the first-timer should be your last resort and should be done with the help and guidance of a skilled-advisor or hands-on consultant. By starting locally, you’ll be able to drive around, meet people in person, check up on the property easily, and learn the business faster.
Be Smart and Find a Local Property Manager: Smart business people team up with smarter teammates. Property managers know all the ins and outs of operating and running apartments – that’s how they make a living. So why not have them as your advisor right now as you’re learning the business? Property managers know neighborhoods very well, if they’re safe, if they’re easy to get tenants, and how stable they are. As soon as I find a potential deal, I get my property manager on the phone and I ask them about the neighborhood and apartment complex. This is my way of “kicking the tires” before I jump in. This way, it will save me a trip to the property and allow me more time to evaluate more deals.
Start Generating Leads: Now that you have a goal, some market research under your belt, and have a city to start in, you’ll need to start finding sources of deals or leads. The simplest way to get leads is to start calling local real estate agents or brokers. I suggest calling them on the phone first and if there is a “connection” there, meet them for a cup of coffee. Even though you are qualifying them, you should be focusing on building a rapport with them. If you don’t like them or if they don’t like you, it’s not worth doing business with them. Life is too short folks! I emphasized this many times that the real estate investment business is a relationship business. So, after you spend a little time building rapport, start sharing with them what you’re looking for.
Start Networking: Here’s that “R” word again. Relationships. Join a local real estate club and start attending their meetings. Go to investment seminars not to only learn the latest techniques, but to meet new people. One of the wealthiest people I know has very little money, but he is the master at networking and meeting people. I see him as truly wealthy. There’s richness in the relationships he brings into his life. The best deals are not going to be found on the internet. The money you need for the down payment is not going to land in your lap. These two things WILL surely come as a result of new relationships you develop.
Analyze Hundreds of Deals: Finding a deal worth making an offer on is a numbers game. You’re going to have to kiss a lot of frogs to find the one prince. The more deals you analyze and look into, the sooner you’ll reach your goal of buying apartments. The bonus of looking at a lot of deals is that you’ll become sharper and sharper at evaluating them. In no time, you’ll be able to qualify deals in a matter of minutes, sometimes seconds.
Get Your Financing: It’s never too early to start thinking about and taking action on how to get your deals financed. You likely fall into one of the two following categories: one, you have your down payment already saved up and it is accessible. Or two, you have very little money for a down payment and you’ll need to go out and find it. Or maybe you fall into a combination of the two? Either way, let’s get than going as well.
Get Your House In Order: What I mean by this is that you’re going to have to change your frame of mind from a homeowner/renter to a business owner. Once you buy your first apartment building and rent to someone, you are hereby a business owner whether you want to be or not. Being a business owner brings great liabilities and responsibilities with it. It’s time to set up an entity (LLC, LP, Corp., trust, etc.) that’s going to own your apartment building and business.