The following is adapted from Creative Cash by Bill Ham, Gino Barbaro, and Jake Stenziano.
Analysis is key with creative and seller financing (CSF), a type of financing that doesn’t fall into the traditional form of lending by banks. Analysis isn’t that exciting, but when you spend your time and attention on it, you’ll reap the rewards that come from good real estate deals.
If you’re just starting out with multi-family real estate and CSF you will likely make some mistakes in your search for good deals—and these mistakes can cost you a lot of money, which is something you definitely want to avoid. Luckily for you, I’ve made many mistakes, and I’m going to share them with you here so you don’t have to suffer the consequences.
When you begin valuing a deal, you’ll want to look very closely at the market surrounding your property. You can lose big if you don’t know your market. It almost happened to me but it ended up okay only because I bought for cash flow, not for sale value. If I bet on selling at a profit, I would have gone into foreclosure with that deal.
You also need to find out the average occupancy of comparable properties in your area. If you look at an apartment deal and see that occupancy is 70 percent and you will cash flow at 85 percent, getting those units rented is a value play for this deal. If you look within a 3 to 5 mile radius and all the properties in the area are at 70 percent occupancy, then this is not a value play at all: it’s the market! Remember, you can rehab a property, but you cannot rehab a market.
Watch this video as well:
For more advice on analyzing multi-family real estate deals, you can find Creative Cash on Amazon.
What started out as a conversation at a live event one hot, sunny day in downtown Atlanta has blossomed into an amazing collaboration between Bill Ham, Jake Stenziano, and Gino Barbaro (Jake & Gino). Bill was instrumental in helping Jake & Gino launch their mentoring program and is one of the lead trainers in the company. With over twenty-five years of experience in operating vertically integrated real estate businesses, and over $100 million in assets under management, Bill, together with Jake & Gino, strive to teach others the strategies that have allowed them to become financially free.