If you are familiar with multifamily real estate, you can agree that your first deal is the most important. Why is this? This is because brokers, sellers, and lenders will not take you seriously if you have never owned a multifamily property. Remember, you are a newbie. What makes you better than an individual who has experience? Here at Luxe Crowdfunding, we want to make sure that others take you seriously and know that multi family investments with you are not risky. Trust us, Florida. We are the best real estate investment group.
What Are The Risks For Newbies
The last thing you want is to be considered a waste of time. No one will do business with you when you have never closed an MFRE deal. You can’t close a deal when no one will do business with you. It is kind of a catch 22 situation. This is a very difficult situation and profession, but it is possible. Landing your investment deal is the biggest obstacle of all, but it is an obstacle you can overcome.
The risk for a seller is that a property goes into contract, but the deal does not close. Once a deal goes to contract, a seller must expend significant time and effort providing due diligence materials to the buyer, lender, and third parties such as surveyors, title insurance companies, and appraisers. It must deal with angry tenants upset over disruptions caused by the inspection process. The seller will incur unrecoverable expenses connected to the transaction, like legal fees. And, most importantly, the market may move against the seller while the property was off the market during the contract period.
For brokers, the buyer’s ability to close trumps everything else. Brokers spend significant amounts of time and money preparing and marketing a property for sale. Once a deal goes under contract, they will also spend significant time helping the seller provide due diligence materials to the buyer. Most importantly, brokers are only paid if a deal closes. And almost as importantly, brokers risk their reputations with their clients, the sellers, if they bring unqualified buyers to the table.
Lenders also see significant risks in dealing with new investors. A very important consideration for them is the buyer’s ability to operate the asset properly and maintains its value as collateral for the loan. Lenders favor buyers with a history of successfully operating multifamily properties, and some lenders will even require a borrower to have two or more years of prior operational experience, regardless of the deal’s inherent attractiveness or the buyer’s creditworthiness. Sellers and brokers also know it may be tough for new investors to qualify for mortgage financing, and for this reason as well, they may be resistant doing business with them. Trust our real estate investment group.
Multi family Investments Need Credibility
As cliche as it sounds, the best advice is simple. Believe in yourself. A typical mistake new investors make is not to believe they are investors until they close a deal. If you do not believe you are really an investor neither will anyone else. If you are devoting substantial time and effort in learning this business, then you are an investor. Believe it, be it, and own it. If you doubt yourself, they will too.
Here are some other ways to build credibility:
- Develop your knowledge
- Learn the lingo
- Leverage your own credibility
- Build a team
- Cloak yourself in other’s credibility
- Cultivate relationships with brokers beforehand
- Use proof of funds to the seller
- Have a professional management company in place
We want you to be successful when it comes to multi family investments. We can help you get there. Luxe Crowdfunding is here for you, Florida. We are a real estate investment group who cares. Call or contact us today.