From Zero to Landlord: Effective Techniques for Financing Your First Deal

In this episode of the Small Axe Podcast, Nico shares his insights on acquiring multifamily properties without needing a huge upfront investment. Whether you’re a first-time buyer or an experienced investor, Nico dives deep into both traditional and creative financing strategies to help you get into the apartment complex game.

Key Takeaways:

1. Getting Started with Traditional Financing 

   - Learn about commercial loans for multifamily properties, typically available for buildings with five or more units.

   - Discover why most first-time buyers begin with local banks or credit unions that understand the area and asset class.

   - Nico explains loan options such as 20-30 year amortizations, interest-only payments, and how to shop around for the best rates.

2. Creative Financing Options 

   - If traditional banks don’t work out, explore creative strategies like seller financing, where the seller holds the note.

   - Hear examples of how Nico and other investors negotiate terms like down payments, interest rates, and even deferred payments with seller financing.

3. Alternative Funding Sources for Down Payments

   - If you don’t have the required down payment, there are several ways to raise it, including joint ventures, partnerships, retirement accounts, and tapping into home equity.

   - Understand how syndications work, where you can raise capital from limited partners to fund a portion or even the entire deal.

4. Exploring Non-Traditional Financing Techniques 

   - Find out about master lease agreements, loan assumptions, and the benefits and risks of using these methods to structure a deal when traditional bank loans aren’t feasible.

5. Joint Ventures and Partnerships

   - Nico discusses the importance of partnering with people who align with your goals and values, particularly in joint ventures where all parties are active in the deal.

Resources Mentioned:

- *Creative Cash* by Bill Ham – A book on structuring deals creatively, which helped Nico understand and apply creative financing strategies in multifamily investing.

Quotes:

- "It’s possible to get into your first apartment complex without a ton of cash if you’re open to exploring different financing methods."

- "When structuring a deal, make sure to align with your partners and carefully consider each financing option."

Action Steps:

1. Evaluate your available financing options for multifamily investing, starting with traditional bank loans.

2. Research creative financing techniques like seller financing and master lease agreements.

3. Think about potential partnerships or joint ventures for raising a down payment.

4. Start building relationships with community banks and credit unions for better financing terms.

Want More Help?

Visit www.smallaxecommunities.com to listen to more episodes of the *Small Axe Podcast* and explore resources that can help you sharpen your multifamily investing skills!