Investing in Apartment Buildings – Top 3 Places to Get Your Down Payment Money

In this article, I want to share with you my top 3 places to get the down payment money you need to buy an apartment building. Many people have built great wealth for themselves by investing in apartment buildings.

Apartment buildings are one of the best investment vehicles you can use to grow your wealth – for several reasons:

1) Cash Flow
This is always at the top of my list, and multifamily properties purchased correctly can provide a stable, predictable source of income. This is especially true in a down economy because more people move toward renting than buying.

2) Leverage
The beauty of investing in apartment buildings is you can leverage your investment vs. other investment options. You put down, say 20%, and your banker puts up the rest of the money. Even though you are only putting down 20%, YOU get 100% of the property appreciation. Try doing that with stocks or bonds!

3) Control
When you invest in a stock, for example, who is in control of that investment? The CEO, The Executives, and the Board of Directors. If you want to increase the value of your stock, what can you do? And of course, the answer is nothing, really. But with real estate, you are in direct control. You can increase the rents, reduce expenses, paint the building, landscape – the list goes on and on. You can do literally hundreds of things to increase the value of your investment, placing you in direct control of your returns.

If you are reading this, you are probably thinking that investing in apartment buildings is a great idea – for many reasons even other that I have listed above.

One of the things that holds many would-be investors back is getting the down payment needed to purchase an apartment property. I hesitate to share just a few of these because there are numerous ways to get the down payment money you need. That being said, here are the top 3 places to get your down payment money:

1) The Current Property Owner
This is especially true today, as lender requirements have tightened significantly since the financial markets have collapsed. Lenders are much slower, and require more information than previously. Let’s face it, they are very conservative in lending out their money vs. 5-10 years ago.

Because of this, it is easier today more than ever to ask the current property owner to either:

A) Carry-Back a Note For Some or All of Your Down Payment
B) Finance the Entire Project

Many owners that are motivated to sell will look at these options especially now, and create a win-win for both of you. Don’t be afraid to ask this when making offers.

2) Other Investors and/or Partners
“Find the property first, and you will find the money.”

If you have a great investment opportunity available, simply ask other investors to either invest with you, or become partners on the project. The other option is to ask other investors to loan you the down payment money needed. There are many different ways to structure this, which makes things flexible for both you and your potential investment partners.

3) Your Own Home Equity
Some investors are hesitant to tap into their home equity to purchase an investment property, and I understand that. But if you have a great project, your home equity can be a relatively easy source of money to get your down payment. There are many ways to look at this, and it is just that – one of many options available.

These are truly just the tip of the iceberg when it comes to finding money for a down payment. There are numerous, numerous others that I cannot cover here, but these should help get your ideas flowing. Remember, if you find a great project first, you will have a much easier time of finding the money for a down payment.