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How to Buy Apartment Buildings with No Experience (7 Steps)

Writer's picture: Jarom A PrattJarom A Pratt

Updated: Oct 14, 2024


In 2019, I bought my first 9-unit apartment complex for $410,000.

2019 multifamily property purchase for $410,000


Four years later, I sold that property for $1,115,000—2.72 times its original value.

2023 multifamily property for sale $1,115,000

So, if you want to learn how to buy apartment buildings like these, keep reading. I will teach you the exact steps you need to take to buy your first apartment building—even without any experience (or money).




multifamily apartment building with helicopter

Let's dive right in!



Step 1: Research How to Buy Apartment Buildings

If you’re looking to start investing in multifamily, the best way to get started is to do your research. This guide will get you going, but other great resources include:


  • Books on Multifamily Real Estate Investing: Search for the top-rated ones on Amazon, Audible, or Barnes & Noble.

  • Real Estate Investing Courses: search online or ask experienced professionals.

  • Podcasts: A free and easy way to start learning without pressure.



Step 2: Decide on a Market

It may sound simple, but finding the best states to buy apartment buildings often starts with looking at the state you live in. You could spend countless hours analyzing the real estate markets of dozens of states before realizing that the best one was your own. For many investors this is often the case due to location, taxes, expenses, and easier business setup.


Location: Imagine flying across the country every time you needed to visit your property. When buying your first apartment building, it’s much easier to purchase and operate your asset nearby. As you scale, you can manage properties across the country—but for now, proximity is key.


Tax Purposes: Speak with a qualified tax accountant for specific advice, but doing business in your own state often has tax advantages.


Expenses: Operating your business locally will help cut costs, from traveling to managing the property.


Easier Business Setup: Forming an LLC in your home state is straightforward. This is important because you’ll need an LLC to hold the property and it will help prevent joint property ownership disputes.


What if my local market is not good for multifamily?

If you need to look outside your state, make lots of phone calls to property managers and brokers, and do online research. Speak with property managers about vacancy rates, crime, schools, and other factors. Look for trends like population and job growth, and if these seem to be rising, it’s likely a good market for multifamily.



Step 3: Develop Relationships in your Market and with Potential Investors

Building a multifamily real estate business starts with relationships. Reach out to local real estate brokers, lenders, property managers, and CRE attorneys to decide where to buy multifamily property near you.


Relationships with brokers and local multifamily owners are key to finding multifamily properties for sale in your area. Over time, you may even start finding properties for sale before they hit the market—these are called off-market deals. We buy apartment buildings that are “value-add” properties, meaning there’s potential to increase the property’s value.


Start by making a list of as many real estate brokers as you can find within an hour’s radius of your chosen market. Look specifically for CRE brokers—or better yet, multifamily brokers. Start calling and emailing them to ask to be added to their listing emails. This should give you a good flow of apartment buildings for sale in your area.


Develop relationships with local property managers so you can gauge which one might be a good fit for managing your apartment complex. Keep in touch and make good impressions, so they feel inclined to share multifamily properties for sale with you in the future. If you are looking to start creating a network, try joining a Meetup group.


You’ll also likely need to begin looking for experienced CRE attorneys to help with all the legal documentation for forming your property LLC, structuring multifamily syndications, and handling investor relations.



Step 4: Analyze Apartment Buildings



Great! You found a multifamily property for sale that looks promising. Now it’s time to request some documents from either the broker who sent you the offering or the seller directly. The documents you will want to review are as follows:


  • T12 P&L (Trailing 12-month Profit and Loss statement)

  • Rent Roll (the list of all occupied units and how much rent is collected from each)

  • Offering Memorandum (summary of the property for sale)

  • Any other insightful documentation they’re willing to provide (e.g., inspection reports)


Often, the broker may not have every document available. Push to see if they can source them, but if not, work with what you can get.


Once you’ve gathered as much information as possible, begin analyzing the deal. Look at key details like purchase price, number of units, occupancy, current gross income, expenses, and net operating income (NOI). Then use a spreadsheet to see if the Pro Forma numbers, debt-to-income ratio, cash-on-cash return, and average annual return check out. If you need help learning how to use a deal analyzer spreadsheet or don’t have one yet, reach out to us for assistance.



Step 5: Submit Offers

Once you've underwritten and analyzed an apartment building and determined it fits your criteria, it’s time to submit an offer. Typically, your first offer will be submitted in the form of a Letter of Intent (LOI). This lets the seller know you’d like to buy their property, outlines certain conditions, and gives them an idea of what various buyers are offering.


Remember, not every LOI or offer will be accepted. If your offer is declined, don’t “make the numbers work” by compromising your analysis, giving up profit, or raising your purchase price to meet the seller’s demands. Stick to the conservative criteria you set.


Be confident in your analysis, and if the deal doesn’t go through, move on to the next one. There will always be more opportunities, and if you lower your standards once, it could become a habit. The criteria and calculations are there to protect you and your investors from unnecessary risk. If those criteria aren’t met because you adjusted the numbers, nothing good will come of it.



Step 6: Buy the Apartment Building

Now for the fun part! Buying a multifamily property is exciting, but remember that there are many steps to follow to stay within SEC, local, state, and federal regulations. Be sure to consult a registered attorney to guide you through each step. Below is a rough outline of what’s involved:


  1. Conduct Due Diligence: Before proceeding, conduct thorough due diligence. Work with your attorney and consult experts to ensure there are no hidden issues in the deal or the property itself that could jeopardize the investment.

  2. Set Up Your LLC: As discussed earlier, you’ll need to form a business entity to hold your new real estate asset. This LLC can be set up under an existing entity or created from scratch. If you’re curious about how we structure LLCs for multifamily investments at EagleCap, reach out for inspiration.

  3. Finalize the Purchase: Work with your attorney, lender, and the seller to complete the structure of the purchase, loan, and all necessary documentation.

  4. Fund the Deal: Start by contacting high-net-worth individuals in your network. Use the brokers and lenders you’ve built relationships with. Attend real estate investing events, leverage LinkedIn, and talk to family and friends who might be interested. Keep in mind that you need to have a prior relationship with someone before offering them an investment, so consult your attorney for further guidance.



Step 7: Manage Your New Asset!

Congratulations! You just bought your first multifamily apartment building! Now it’s time to get to work. Chances are the property will need some value-add improvements, so lay out your plans, secure permits, and get construction crews on site. This process can be complex, so don’t hesitate to contact us if you have questions.


Whether it’s five, 50, or 500 units, you’ll want to hire a property manager. No one wants to be fixing toilets on the weekend. If you followed the earlier steps, you should already have a vetted property manager ready to go. Put them in place to run the property, and they’ll handle tasks like utility payments, upkeep, maintenance, tenant screening, turnover, leasing units, and rent collection. If they do their job well, and your market research was solid, you should expect at least 90% occupancy, ideally 95-98%. You put them in place, and they handle the rest.


Well, get out there and make it happen!

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