3 Steps to Buying Your First Small Multifamily Property

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Small multifamily real estate investing can lead you to financial freedom faster than you think. Compared to traditional single-family rental properties, small multifamily properties often offer more cash flow, the ability to scale quicker, and less competition than the properties every first-time home buyer is looking for. Small multifamily investing is so good that it remains seasoned investor Dave Meyer’s favorite way to invest after over a decade of investing in rental properties. So, how do you get started?

In this episode, we’ll walk through the three beginner steps anyone can take to start investing in small multifamily real estate. We’ll show you how ANYONE can get into this asset class, even with ZERO experience, why small multifamily is the perfect “sweet spot” for rental property investing, and how to overcome the biggest challenges to getting your first deal.

But that’s not all. We found a small multifamily rental property for sale and go step-by-step through it, analyzing it within minutes so YOU can do the same for your first or next property. Small multifamily is the perfect place to start your real estate investing journey, and after you watch this episode, you’ll have EVERYTHING you need to start investing!

Ready to become a BiggerPockets Pro? Click here to sign up and use code “MULTIPOD24” for a special discount!

Dave:

Hi everyone and welcome to the BiggerPockets Podcast Network. My name’s Dave Meyer and I’m going to be your host today. If you’ve only known BiggerPockets through this podcast or maybe one of our other podcasts, maybe you don’t know that every single week we actually do webinars to help real estate investors on a specific topic and one of the ones that I presented recently was so popular that we’re going to bring it to you as a podcast today. This is obviously going to be an audio version of that webinar. If you prefer to view this visually and want to see all the slides that I normally present during this webinar, you can check that out on the BiggerPockets YouTube channel, but we have adopted it specifically for audio format, so you should get the full value out of the webinar from this podcast. Today’s webinar that I’m going to be going into is called How to Buy Small Multifamily Properties, and the reason we’re talking specifically about this asset class instead of any of the others is because I personally believe small multifamily is one of if not the best asset class to grow and scale a cash flowing portfolio over time, and it’s also really not that complicated.

There’s a three step process that we can follow and I’m going to introduce you to during this webinar that can help really anyone with any experience level get to that portfolio that they’ve been dreaming of. And on top of all the value that you’re going to get through this webinar, we at BiggerPockets want to give you an extra gift, a thank you for spending this time with us because we know that your time is very valuable and we genuinely appreciate you choosing to spend it with us and further your real estate education. And because you showed up and committed to this webinar, we are going to give you 20% off our incredibly valuable pro membership. It has all sorts of tools like our calculators, our rent finders, I’ll talk about that in a little bit, but if you want to go pro today, you can get it for 20% off.

Just use the code multi pod 24, I’ll spell it for you. It’s M-U-L-T-I-P-O-D and then the number two four, that will get you 20% off you just go to biggerpockets.com/pro and use the code multi pod 24 to get 20% off. So that is the first gift that we’re going to give you just for listening. And also for those of you who stick around to the end of the webinar, I actually have another gift for you, so make sure to stick around to the end. Alright, with that said, let’s jump in today’s webinar, how to Buy Small Multifamily Properties. Hi everyone and welcome to today’s webinar, how to Buy a Small Multifamily Properties. I hope you’re all excited to be here. I know I am because small multifamilies is how I got my start investing in real estate. It kickstarted an incredible journey for me to financial freedom and it’s still what I buy most frequently.

The last deal I did just a couple of weeks ago was also a small multifamily property and so this is something I’m super excited and passionate about talking to Now, if you guys don’t know me, let me just quickly introduce myself. My name is Dave Meyer. I have been a real estate investor for about 14 years. I’m also the vice president of Market Intelligence at BiggerPockets. I’ve been working at BiggerPockets for eight years and during that time I’ve had all sorts of cool jobs. Right now I get to really study the housing market, study real estate investing and teach what I learned to all of you through a number of different channels. I host the podcast on the market. I’ve written two books, real estate by the numbers and a start with strategy. I’m on YouTube, I write for the blog, I do all sorts of cool stuff just like that.

Now I have built a successful portfolio and I am proud to say that I am financially free doing large part to real estate investing, but I just want to remind you all that it wasn’t so long ago that I was also a newbie to real estate and it took me many years to get to the portfolio that I have today through a lot of trial and error and mistakes and I’m hoping today that I can use some of the mistakes and things that I’ve learned along the way to make it a little bit easier for you all to build a portfolio. So that’s enough about me. Let’s get into today’s agenda. What we’re going to cover is first and foremost a three-step process for successfully finding financing and analyzing your first deal as a real estate investor. And this is going to be specifically focusing on small multifamily properties.

Step two in today’s agenda is to identify and overcome some of the common obstacles in real estate investing because there are risks, there are obstacles in real estate, but if you name them, you discuss them, you can easily navigate through them. And then third, I’m going to give you a live demo of tools and resources to make the entire process faster and easier. And for those of you listening on the podcast, don’t worry, I’m going to describe everything that I’m doing on screen in detail so you understand and can learn alongside us. So those are the three agenda items that we have. And just by the end of this webinar, I want you to know that you will be able to build a portfolio using small multifamily properties. And that’s of course if you discover that this is for you, maybe after you listen to the webinar you say, you know what?

Real estate is not for me, that’s okay. But if you’re into this idea of real estate and financial freedom, this webinar, by the end of it, you will be on track for your first deal or your next deal depending on your experience level. Now, if you’re listening to this webinar already, you probably already know that real estate investing can improve your life. Perhaps you’re here because you’ve heard that passive income that can last a lifetime can really change your whole situation. Or maybe you’re looking for cashflow that comes in month after month like clockwork or maybe you’re into something bigger than that because although we all love appreciation, we love cashflow, most investors that I know are actually looking for something bigger, right? Because cashflow money, that’s all a means to an end, right? Ultimately what you’re trying to get to is something bigger like financial independence or generational wealth that’s going to set your family up for decades to come.

Or building a financial fortress that helps you sleep at night, take more risks and maybe pursue some of the things in life that you’re really passionate about but don’t currently feel comfortable pursuing because you need to make money, whatever it is. Before we jump into sort of the tactical stuff that we’re going to talk about, I want you to just take a moment and think about what it would actually feel like to take action starting today and sort of take control of your financial freedom. Ask yourself what would that future look like? And I hope you are like me and know that it could change everything. It could change your current situation, your job, the way your family spends. Its time. And to me, and I think probably most people agree, that is super inspiring and super motivating and the great thing about this is that it’s not that hard.

The road to financial freedom just starts with one property. You don’t have to think about 10 properties down the road. What you need to focus on is just getting to that first deal or that next deal and taking baby steps towards financial freedom. Alright, so if real estate is so great, why isn’t everyone doing this? I’ll be right back after this quick break to address some of your concerns. Welcome back everyone. I just want to reiterate that it is natural to have fear when making a large financial decision and we are here to arm you with the tools to feel prepared. So if it’s so great, if everything I’m saying is so amazing and you can achieve financial freedom, change your whole course of your life and your family’s life through real estate, why isn’t everyone doing well? People have reservations and I want to address those upfront because there are doubts and concerns that investors have are perfectly legitimate.

So let’s just talk about a couple of them and how we’re going to mitigate them. So first and foremost, most people when they come to me and say, I can’t invest in real estate, Dave, it’s because they think that they don’t have enough money, but in reality, you can actually start saving and building towards the right deals and finding great deals that actually meet your budget today, and we’re going to talk about that in a moment. The other thing I hear very commonly is people are afraid of losing everything on the wrong deal. And I get this because if you’ve never bought real estate before, that can feel really intimidating. But as you’re going to see through the course of this webinar, if you follow a system and a proven approach with the right tools and the right systems is actually not that hard. The reality is that tens of thousands of real estate investors before you have paved the way, they have invented systems, they have invented tools that you too can use and it makes the risk of buying the wrong deal or not knowing what you’re doing relatively small.

But I just want you to know that I understand these concerns and we’re going to talk about them throughout the webinar because I’ve faced similar doubts when I first started investing and I know exactly how you feel. I was in your shoes not that long ago, but through this process of becoming financially free and building my portfolio, I’ve learned that honestly all you really need is three things. You just need the right tools, you need the right education, and you need the right people. Guys, I am not special. I don’t know something you cannot learn. I don’t have some magical skill. Really all it is like I said, is following the right tools, the right education, the right people, doing what other people have done in the past. So that’s what we’re going to talk about today. I’m going to just show you what other people have done and hopefully that helps you see that within you is the potential to take the necessary steps towards success and acquiring your first or next property.

I’m super excited to show you how to get on this journey today. Now I learned this stuff sort of by making a ton of mistakes over time. Actually it took me six years of investing, believe it or not, before I discovered BiggerPockets. And once I did, my portfolio just really started to take off. It grew relatively slowly for six years. In the eight years since I’ve been an employee and member of BiggerPockets, I got these tools that helped me scale faster and lucky for you, you get to use all of them from the start. You don’t have to make the mistakes I did. You get to just jump right in and have that headstart and I’m not the only one who has used these tools to be successful. Take it from Jason Vile. He is an investor participates in the BiggerPockets forums. Jason said that his pure passive cashflow from his apartment rentals has recently surpassed his living expenses.

He was able to quit his six figure finance career and do real estate full time. That’s all due to BiggerPockets life-changing content and the tools he got from BiggerPockets. Now my story, Jason’s story, not all that unique. You can find them in the BiggerPockets forums, you can find them in our Facebook group. Wherever you go, you’ll see that this is not that uncommon for real estate investors. So what I’ve learned and what Jason have learned is to use these tools and what we’ve also both learned is the topic of our webinar today, which is that small multifamily investing is sort of a hack and this is a really powerful tool and thing to get your education up on because I think it’s sort of this perfect sweet spot for investing that I love and I’ve used it a lot in my career and the part that I really like is that it doesn’t actually take many small multifamily properties to start building the momentum that can set you on a path towards financial freedom.

With just a few well chosen properties, you can replace your income, you can build wealth and start living life on your own terms and ever remember, this isn’t some far off goal you’re never going to hit. I’m going to prove to you today that you can get started, but remember, it is going to take work. Real estate is more passive than most jobs, but it does take effort. It does take some skill, but if you have the motivation, if you have the right mindset and you’re willing to put in just a bit more work, then you will be able to start building wealth and build that portfolio you’re dreaming about today. So let’s dive in. First things first, let’s just talk about why small multifamily is such a powerful way to build your portfolio. I think that it’s sort of this perfect sweet spot because there’s four things about small multifamily that stand out.

First and foremost is the cashflow. Small multifamily is basically designed to cashflow. When you think about a single family home that is designed for a family to live there or a couple to live there, it’s designed as a primary residence and that doesn’t mean it can’t make a good investment, but it’s not meant for that. The only reason you build a duplex or a tripex or a quadplex is to buy it as an investor, to rent it out and to earn a solid rate of return. And so small multifamily is customized for that. The second thing that I love is residential financing. If you buy a property that is four units or fewer, you are going to be able to get lower interest rates, better down payment terms and just more favorable financing all around than if you bought something bigger and the cutoff is actually four units.

So if you bought five units or above, you’re typically going to have to get a commercial loan, which is a bit riskier and definitely more expensive. So that’s why small multifamily specifically is great because of that residential financing. The third thing is less competition. Like I was just talking about. Most people who go out and buy are looking for places to live and that’s great and they’re mostly looking for single family homes. The only people who are looking for duplexes, plexes and fourplexes are small investors like you and me. And although there are some of those out there, there are not as many as home buyers. 80% of people who buy homes are home buyers only like 15 to 20% are investors, so there’s just less competition. The last one is the ability to house hack is incredible with small multifamily. If you’ve never heard that term, house hacking is an owner occupied investing strategy where you live in one unit and rent out the rest.

This is how personally I got started. It’s a great way to learn and if you have a duplex, triplex or fourplex, it is really makes house hacking very easy. You can optimize your cash flow, get that appreciation. It’s probably the single best way to start investing anything is house hacking a small multifamily property. Now, just I said it earlier, but I’ll say it again. My first deal was a small multifamily in Denver. It was four units and I did sell it recently, but right before I sold it, it was generating 2200 bucks a month in cashflow. Incredible. My second deal was also a small multifamily. It was three units in Denver. Still own that it’s generating $2,500 a month in cashflow. So hopefully you can see that you don’t need that many of these to be able to replace your income. Now I bought these about a decade ago and so that cashflow has grown over time, but real estate, it’s not a get rich quick scheme.

If you buy them and wait 5, 10, 15 years, they’re going to be performing incredibly for you as have these properties for me. In fact, as I said earlier, I have bought recent deals that are small multifamily. I just this weekend when I was working on my portfolio a little bit, I think I looked at three or four small multifamilies and analyze deals. So I love this asset class and hopefully you’re sold. So if you are sold, let’s get you one and talk about the three steps to buying your first or your next if you already have one small multifamily property. Now the three steps, this is not physics, it is not rocket science. Real estate investing has challenges, but it’s certainly not complicated. This is just stuff that anyone with the right motivation can do. So step one here is finding deals. Step two is analyzing deals, and step three is financing deals.

Again, not that hard, but if you’ve never done it, you might not know where to start and we’re going to cover all that today starting with step one, which is finding deals. Now at BiggerPockets we often do these surveys just to understand what people need to learn and what they’re struggling with. And our surveys show that finding deals is actually the second biggest perceived challenge to investing in real estate only behind funding deals, which we’re going to talk about in a minute, and you might notice that I said perceived because finding deals shouldn’t really be something that you’re overwhelmed by because there are tons of different ways that you can find good deals. A couple ways you may have heard of are driving for dollars, which is basically driving around finding deals or properties that you think would make good investments. Then trying to contact the owners and seeing if they will sell to you who can also do direct mail, which is a similar idea, but rather than driving around, you just send out a bunch of postcards or mailers to try and get off market deals or you can search for off market deals on Craigslist, Facebook marketplace or some of the other online sites that show that kind of stuff.

Now these are good ways to get deals. I’ve found a few deals off market, but the biggest downside to them is that they take time and effort and the learning curve can be a little bit steep if you’re doing direct mail, it requires a bit of money, but you can find amazing deals this way. If you want to learn how to do any of these, I don’t have time to get into the tactics, but you can go in BiggerPockets, learn the ropes on any of these deal finding tools, but since we have limited time today, I’m just going to focus on my favorite way of finding deals, which is remarkably simple everyone. All it is is work with an investor-friendly agent. Now I know that sounds overly simple, but it really can be that easy. The most recent deal that I personally bought I found through my investor-friendly agent.

My friendly agent also helps me find off market deals. I looked at two this past weekend because my agent is so tapped into the investing community, he’s getting off market deals and presenting them to me, and this might not be the sexiest, coolest way to find deals, but it sure is the easiest and it’s definitely the way I’ve found the majority of the deals I’ve bought over the course of my career. If you want to work with an investor friendly agent that is super easy. Maybe you don’t know one and you’re thinking, how do I find one? Well, I’ll tell you like I said, and I will say throughout this webinar many times it’s all about having the right tools and BiggerPockets has a free tool that will match you with an investor friendly agent. All you need to do is go to biggerpockets.com/agent. You enter a bit of information about yourself like where you want to buy the type of asset class.

If you listen to this webinar, hopefully it’s a small multifamily, you can enter in what your budget is and you’ll get matched with an agent who can help you find great deals. And it really honestly, everyone can be that easy. I know it sounds complicated and not everyone says finding deals is hard and it can be if you’re doing it alone, but if you have an investor friendly agent, you really can find deals and I don’t understand why more people don’t do it because it’s completely free. It is the easiest, least time and consuming way to find deals. So that was step one, super easy right now that you have a time friendly strategy for finding these deals, we can move on to step two, which is how to analyze those deals. And if you know anything about me, if you follow me or my podcast or anything like that, that analyzing deals is sort of my thing.

I wrote a book about it called Real Estate by the Numbers and I wrote that book and made this. The second step in the webinar is because I believe that analyzing deals is maybe the most important skill that a real estate investor needs to develop because if you have a great agent or you do one of those other strategies, you’re going to start getting what we call leads. Leads are not deals when your agent sends you a property. That’s interesting. That’s all it is. It’s interesting. It means you need to do further analysis to decide if the numbers are going to work and it’s going to become a property that you actually want to offer on and potentially buy in the near future. And the way you do that, the way you go from leads to deals and offers is through deal analysis. Now, if you’re not super into math or you just think that that word sounds super intimidating, don’t be worried here.

Again, we have tools that can help you do deal analysis really quickly using the BiggerPockets calculators, which I’m going to walk you through in just a second. You can learn to get deals and analyze deals in five minutes to do your preliminary analysis and just start screening those leads and figure out which ones you want to do a deeper dive on. And that’s important to be able to do this accurately and quickly because even though you’re getting great leads in, you’re going to have to look at 30 deals before you find one to pull the trigger on. Maybe you get lucky, you look at five and you pull it off. But I’d say on average I look at 30, 20 to 30 deals probably before I offer on one. And so if I’m taking 30 minutes to analyze every deal, that’s time prohibitive. I can’t do that.

So I use the right tools to be able to analyze deals quickly. I’m going to show you how to do that right now. Now since this is a podcast that you’re listening to this webinar on a podcast, I’m going to describe to you what I’m doing. I’m going to biggerpockets.com and if you want to do this later, there’s just a header on the navigation bar that says Tools. You just go to the rental property calculator and we’re going to start entering information and I actually found a duplex deal in Green Bay, Wisconsin that we’re going to walk through. I picked Green Bay honestly because I was reading some US News and World Report or whatever, that magazine is not actually magazine to online article and it said that Green Bay had the highest quality of life anywhere, never been there. Maybe that’s true, but I just figured, hey, I found this deal.

It looks like a cool property, this duplex here, it’s only 180 grand and I thought we would analyze it together. So what I do in the calculators first just put in some identifying information, put in the street address. I upload a couple photos so I can remember the property that I’m talking about. Then I put in basic purchase condition, so that’s like purchase price, which I rounded up when I just said 180. It’s actually listed on the market right now for 1 79, 900. So I don’t know if I’m going to offer that. We’ll figure that out in a minute once we do the analysis, but I’m going to start with the purchase price and then move on to closing costs, which is about 5,000 bucks. Now I’ve done enough deals, so I know that purchase closing costs are about 5,000 bucks, but on the calculator, if you ever get stuck doing deal analysis, there’s these little tool tips they call them where you can click on the little question mark help button and it’ll tell you some rules of thumb that you can use to do your, and I find them super helpful.

I’ve done this enough times that I know how to do it, but when you’re first getting started, it can be really helpful. So I’m going to move on to our loan details now, which is I just put basic information about what my loan assumptions are and I’m going to put 25% down because I’m a real estate investor. If you’re doing a house hack, you can maybe put 20% down or 10% down. You should talk to your lender about that, which we’ll talk about in just a minute. But for me as an out-of-state investor, I would be putting 25% down. So I’m going to put that in. I’m going to use 6.75 as my interest rate because that’s what I was quoted most recently as, and I’m going to put in 30 years as my loan term because personally I love long-term fixed debt. Next thing I need to do is put in my rental income, and this is a place where I see a lot of investors get stuck.

Doesn’t need to be that complicated. Again, at BiggerPockets we actually have a tool called the Rent estimator that’s going to help you do that. So again, you just go to that tools in the navigation, go to Rent estimator, put in your information. I should have mentioned this earlier guys, but each side of this duplex is two beds, one bath, so I’m going to put in two bed, one bath and for this specific area and the BiggerPockets rent estimator is going to go find comps, which is basically just comparable properties that have been listed and rented out recently. And what it shows me is that each side of this property is likely to get rented out for $1,250 per month. So this also tells me that as a high degree of confidence, the estimator also looks at the quality of the comps and says, Hey, this is a good comp.

We have a lot of other properties in the area that look like this one. So you can feel actually pretty good about this estimate. It’s actually, this is cool. It shows a map here. It’s in the air Lambo Fuel with a Green Bay Packers plate. Very cool. So now we can go back to our calculator and just put in 2,500 bucks a month for rent because remember it’s 1250 for each side and we’re moving right along. The last step in deal analysis, and I hope you guys can see how simple this is. So far I’ve already done four of the five steps. The last step is to put in our expenses. Now, property taxes here are going to be about 120 bucks per month. Insurance comes out to a hundred dollars per month. Those are our fixed costs because we know what our insurance and property taxes are going to be at least for the next year.

The last step is variable costs and we’ll talk about how you can actually account for those even though they feel unknown. Right after this quick break, we just covered the first few steps of analyzing deals and the last part we have to get to is variable costs. These are things like repairs, maintenance, vacancies. You can’t really predict that, but you can use rules of thumb to make sure that you’re holding enough money back in case those things come up. So for repairs and maintenance, I like to put in 10%. For vacancy, I use 8%, which is the equivalent to about one month of vacancy every single year, and I like to just hold that back. Ideally you have no vacancy, but I keep that 8% in reserves just in case something happens. The tenant leaves can’t find one easily, and I have that just in case.

Then we have capital expenditures, which I’m going to put at 10% again, and capital expenditures, it’s kind of like repairs, but it’s for either improvements to the property like adding a new bathroom or finishing out a basement or for large expenses like a new roof or a new furnace or hot water heater and you want to keep those separately. They’re treated actually separately by the IRS, so that’s why we don’t keep them in the same bucket here, but so we have 10% for repairs, 10% for CapEx, and 8% for vacancy. Next, I personally have to put in management fees. I don’t live in Green Bay, and so if I’m going to manage, I need someone to manage the property. Typically with my out-of-state investments, I pay around 8% for property management, so I’m going to put that in there and then move on to our utilities like electricity, gas, water, and sewer.

Now, personally when I look for small, this is something just a tip you guys should look for is I personally like when I have properties that are metered separately for utilities, that way the tenants just go and pay their own electricity, they pay their own gas, I don’t have to get involved. Why would I need to get involved? Now I’ve bought properties where you don’t have separate metering and it’s fine. I just figure out what the total utilities are every single month, add it up, split it by number of bedrooms and then I charge that to my tenants. But this particular property is metered separately and I really like that. It just makes things simpler because when I do my analysis now, when I put in electricity, gas, water, I just put $0 because the tenants are going to take care of that. This property doesn’t have an HOAI usually pay for garbage.

It’s like 25 bucks a month, so I’m going to put that in there and I’m done. That’s deal analysis guys, because you have the right tool, all you have to do is do a little bit of research into what costs are in this location, what you can expect, make solid assumptions and the calculator’s going to do the rest, and this deal is actually kind of amazing. Now looking at it, so the cash cash return is 11.5%. I haven’t bought at 11.5% cash on cash return in, I don’t know, eight years. So this is a great deal, honestly, if I invested in Green Bay, I might be offering on this one right now. But I think it’s really helpful to sort of gut check some of your assumptions here because what I’m seeing here is that I would be investing in this $180,000 property and I’d be making nearly $500 a month in cashflow.

That’s incredible. That’s a buy all day in my book. But let’s just make some change up some assumptions using the calculator. You can gut check yourself. So I’m going to just use this little slider here and say, you know what, maybe I can’t get 2,500 bucks a month. What if I get 2250? Maybe I’m 10% off. Well, in that scenario, instantly I can see that I’d be still be making $320 a month and still be getting a cash on cash return of 8%, which is phenomenal. So that’s amazing. I’d still buy that deal even if I was alfon red, so that’s really good. Or maybe it gets super competitive and instead of 180, I actually have to offer one 90 on this deal. Well, in that case, my cashflow gets hurt a little bit. I go from about 500 bucks to 4 25, but my cash on cash return still 9.7%, which is a deal all day.

So this tool has really helped me not just do my preliminary analysis, but gut check some of my assumptions to be extra conservative and make sure that even though if I’m wrong about some of the inputs I made that I’d still be regretting a great deal. I can also look at appreciation, long-term benefit. For example, I can see that if I held this property for 10 years, I would earn a profit of about $111,000, which is an annualized return of 12%. Just for reference, stock market makes about 8%, so that’s a lot better than the stock market. Plus you get all these tax benefits. That’s why I love real estate investing. So that’s deal analysis. I should let you know that if you do use this tool, don’t forget to use the share button at the top. You can generate A PDF that is this really professional looking report that you can use when you go to talk to a lender to get your spouse on board to find a partner.

That’s one of the most underutilized parts of the BiggerPockets calculators, but I recommend you use that. Okay, so that was the deal analysis, and again, that was step two. First we talked about finding deals. Then we talked about analyzing deals, which we just did, and hopefully you can see that this is something that you can start doing accurately and well right now. And again, you probably want to start practicing because you’re going to need to do this 20, 30 times to get that first deal and you want to get good at it over time. So you need to put in those reps in and that will help take the guesswork out and really clear one of those hurdles that we talked about earlier, which is not knowing what deals to buy. Once you find a good deal, you move on to step three, which is funding deals.

And there are a lot of great ways to fund deals. People get hung up on this, but you can get hard money loans, you can get conventional loans, partnerships, private money, all those different things. But I actually think that the right way to do it is to start simple, especially if you’re early in your career and use either a FHA or conventional loan, which is basically just taking out a mortgage. You can use a partnership if you don’t have enough money to get a down payment. Often people partner. That’s how I started. I didn’t have enough money for a down payment, and so I took out a mortgage 80% to get the majority of it, but even my quarter of the down payment that I was responsible for, I took out a secondary loan on that I paid back at 7% interest over time and that was a partnership.

And sure it hurt my cashflow in year one, but that deal was making me a ton of money. That deal was truly a grand slam for me and I was able to get into it because I used a conventional loan and a partnership or maybe if you’re lucky and you do a lot of work, you can find seller financing. So that is another creative way that you can get good financing terms is seller financing. So I just listed a couple of easy ways to get funding, but I know that this is probably feeling a bit intimidating. And in fact, our surveys show that funding is the number one challenge in buying real estate. I want to share with you something that really all experienced investors know, which is that once you have the right property and you have done good deal analysis, funding deals becomes a lot less stressful.

Now, we’ve talked about the three steps that you have to go through to get your next property and they go in a very deliberate order. We started with finding deals, then analyzing deals, and we did funding last. Now think to yourself, why would funding come last? Because a lot of people see this as the major hurdle and they start to think, oh, I need to get funding right now, but think this through a little bit. If you were to come up to me and say, Dave, would you finance a real estate investment for me? And I said, yeah, I’m interested. What deal are you going to buy? And you said, oh, I don’t know. I’m just curious if you would fund me. I’d be like, no, because I don’t know what you’re going to buy. Maybe you’re going to go buy a bad deal. In another scenario, if you came to me and said, Dave, I found this great deal.

I did a professional analysis. I have a PDF that I can show you that shows that this gets an excellent RO, I have good assumptions. I have done my homework, I know how to do deal analysis. Would you fund my deal? And then as a hypothetical lender, guys, I’m not actually going to lend to you, but I’m just saying as a hypothetical lender, that would be very interesting to me. And that is how real lenders think. They want to know that you are a good investor, that you have done the appropriate right steps, and when you find a good deal, people are going to want to invest in it, whether that’s a traditional bank or a partner. If they say, Hey, so-and-so has got a great deal, they’re going to want to work with you. So that’s why we go in this particular step, and hopefully you can see that that’s going to make funding easier.

Hopefully you get on board and you understand what I’m saying here, but you’re probably wondering, Dave, how do I find a good lender in the first place? Well, again, we have more tools. The tools just don’t stop coming guys. Again, as I told you, this is sort of the key is just to use the tools everyone else is using. It’s not that exciting, but it’s really works. And so what I recommend is using the BiggerPockets lender finder to help you find an investor friendly lender who understands how to lend on investment properties. It’s a little bit different. It’s not super different, but it is a little different than buying a traditional home. So working with a lender who understands the unique considerations that an investor needs to think about is really going to help you. Again, just go to biggerpockets.com/lenders. Alright, so those are the three steps.

Hopefully you guys see how easy this is. Step one was finding deals, step two, analyzing deals, step three, financing deals. Hopefully you could see that if you can do these things, you can get to that first or next property. But I do want to take a step back and talk about fear because I think this is the point where people are like, okay, I’m excited. I see what this could do for me and my financial future, but I’m still scared. I’m still afraid of losing money or be able to secure financing or maybe not having enough knowledge. And again, I’ve been there. Guys, I’m going to just say it again that all investors feel this way and these concerns are not unreasonable. They are common. But I want you to remember that even though it may feel like real estate investing is jumping off a cliff, if you’ve never done this before, it may feel like you’re doing this big leap of faith and you don’t know how it’s going to turn out.

But what experienced investors know, it’s it’s not actually really like that. It’s not just like this guess it’s not speculation. It’s actually just following this process. So rather than jumping off a cliff, the analogy I personally like to use, it’s actually like hiking. It’s going uphill a little bit. You do have to put in that work, but you’re on a well-worn path and you’re walking with friends, right? Because this is something that lots of other people have done. There’s a community at BiggerPockets that’s going to help you do it. So it’s much more like walking this nice path with your friends than it is like skydiving or base jumping or something like this. And I’m going to beat this metaphor to death. So just bear with me just a minute, but I like this metaphor, so we’re going to stick with it. If you were to go hiking, what would you bring with you?

Well, first you’d probably go with other people, especially if you’re new, right? You would go with someone who’s experienced in hiking. You would probably also bring a compass and a backpack and a water bottle, AKA. You would bring the right tools along with you, and you would probably also have a plan for hiking that is probably bringing a map or following a specific trail. Real estate investing, it sounds kind of similar, right? Just like hiking, you need to bring experienced companions, the right tools and the right plan. The same exact thing is true in real estate investing. If you bring those three things along with you, you can mitigate the risk and really increase your chances of success. I know this because this is what we do at BiggerPockets. We provide these tools, the training community you need to find, fund and analyze real estate deals with confidence.

And you are not alone. We actually have 3 million investors who are already using BiggerPockets to fuel their financial dreams because they know that real estate investing works. And I know it works because it worked for me and I know that it could work for you. And if you are feeling excited about this, if you’re saying that you can follow these steps, this is something you can do and achieve and that you can get to that next deal relatively quickly. We are here at BiggerPockets to support you every step of the way. So with your permission, I’d like to make a special invitation to all of you listening to upgrade your real estate investing game with BiggerPockets Pro Pro is everything you need to succeed in real estate investing. We’ve got tools, content, community services. It’s really all here. Specifically what you get are the calculator that I described.

You get that Rent estimator. You also get all sorts of landlording tools like leases. You get access to bootcamps. Really, BiggerPockets Pro is basically just a one-stop shop to start scale and manage your real estate investing portfolio. And you might be wondering if you’ve, I’m familiar with the tool, how one subscription can really provide everything you need to start scale and manage your portfolio. So let me just quickly give you the details. First and foremost, you get the best game in town for deal analysis. As I’ve said, deal analysis, it’s kind of my thing. I wrote a book about it and these calculators are what I use to screen leads and do my analysis. And you can use the same exact tools, the same rent estimator that I use. You also get direct contact with some of the most experienced investors in the game. People like Ashley Care, Henry Washington, Matt Faircloth, and more.

By getting access to the BiggerPockets bootcamps, you actually get 50% off the BiggerPockets bootcamps by being a BiggerPockets Pro. If you get the kind of hands on mentorship that is really difficult to find, especially at this price that comes with Pro. Next, you get to show people that you’re serious and join sort of the serious community in BiggerPockets. So we have private pro forums. You also get to show off to everyone in the community that you are a pro member, which will lead to more people looking at your profile, more people willing to answer your questions and network with you because you have skin in the game and you are serious about growing your portfolio. We also have this sort of landlord command center, which gives you an unbelievable amount of software tools like Rent Ready, which is this really cool all-in-one property management software.

Normally it’s 240 bucks a year. It is free. With the BiggerPockets Pro membership, you also get portfolio monitoring and accounting software. With essa, you get free lawyer approved leases for all 50 states, which would cost like five grand if you did that yourself. So as you could see, each one of these elements of Pro is probably worth the price all by itself. But at BiggerPockets, what we’re trying to do is bring all the tools to you for a very reasonable, inexpensive price to help you get started on your BiggerPockets journey. It’s also tax deductible for a lot of people and not a CPA, but talk to your CPA because it’s probably tax deductible for you. But the reason you should really consider BiggerPockets Pro is not any one feature. The fact that you can it on your taxes, it works. It actually helps people get to their financial freedom.

It’s worked for literally tens of thousands of other investors. Take it from Aaron C, who’s a BiggerPockets Pro member who said, there’s no way I could analyze the volume of properties I do without being a BiggerPockets Pro member or Beth R who said that BiggerPockets Pro has been the foundation of her real estate investing career. Now you’re probably wondering this amazing tool that helps you so much financially, how much does it cost? And if you actually added up all the components individually, it would cost more than $5,000. That is probably worth it. I would probably pay somewhere close to that for each of these tools. I know how much they work, but that’s a big investment and don’t worry, we’re not charging anywhere close to that. Actually, BiggerPockets Pro normally is just $468 per year if you buy it month to month. But if you want to go pro today, we actually offer a pro annual plan, which is $390.

So you can save some money by doing that. And as I said at the top of this webinar, we’re going to give you this special offer where you get 20% off our best deal, which is three 90. So you’re getting it for 312. If you go BiggerPockets annual today, that’s $156 in savings. Now because you listened to this entire webinar and we’re feeling extra generous at BiggerPockets, and I told you I had extra bonuses for you today, I have these extra bonuses for you. The first one, we call it the show me the Money Starter Pack. This is for people who don’t know how to fund their first deals or don’t know where that money is going to come from. So we have three things here worth $470. It’s a ebook on eliminating debt and repairing credit. We have worksheets to help you build your pillars of wealth, and we have a nine hour workshop on No and Low Money Down investing incredibly valuable for new investors.

We also have another bonus that I actually created myself. It’s called the Demystifying the Housing Market bundle. It gives you a guide to how to invest in a changing economy, investing in an Uncertain Economy video that’s going to show you how to build different scenario plans to help you if the market turns and changes at some point, how to adjust your strategy and your tactics accordingly. And you’ll get my 2024 state of real estate investing report, all of that individually, 500 bucks, but you’re getting that for free today. And lastly, we have my favorite bonus, which is the Acer analysis toolkit. And it’s my favorite because I get to give you my book, real Estate by the Numbers completely for free. I wrote it with Jay Scott. It’s an incredible book that’s going to help you become a pro in deal analysis. You’re going to learn how to run the numbers.

You’re actually going to get my Excel master file, which has all these different advanced spreadsheets that you can use if you want, and video tutorials on how to use all of. So if you go pro today using the code that I’m going to give you in just a second, you get all of those bonuses plus 20% off. And remember, in addition to all those bonuses, BiggerPockets Pro comes with a 30 day trial. So if you don’t love it, you can get a hundred percent refund, no questions asked just by emailing [email protected]. So that’s what I have for you today. That is the end of this webinar. Remember guys, if you want to go pro, get the tools and the community and the education that you need that tens of thousands of other investors have used to build their portfolio, just go to biggerpockets.com/pro and enter the code multi pod 24, that’s M-U-L-T-I-P-O-D two four at biggerpockets.com/pro.

That’s going to get you the 20% off. That’s going to get you the show me the Money starter pack, demystifying the housing market bundle and the ac your analysis toolkit. You’re going to get it all for this incredible price. So I hope you guys learned a lot today. I hope you’re as excited as I am about investing in small multifamily properties. If you guys have any questions for me, you could always find me on biggerpockets.com. You could send me a message there. I’m always happy to answer any questions that you have. And again, if you want to go pro to get those tools that are going to help you accelerate your journey, go to biggerpockets.com/pro and enter the code multi POD 24. That’s Multi Pod 24. Thank you all. Again, my name’s Dave Meyer for BiggerPockets, and I’ll see you guys soon.

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