Reddit mentions of The Complete Guide to Buying and Selling Apartment Buildings

I love this question and always get it from friends of mine. I just send them the same list of books that got me started and convinced me to pursue strictly investing in multi-family. These have all been out for some time but the fundamentals of deal analysis have pretty much stayed the same. IMO, the multi-family game is all about numbers and finding ways to add value and force appreciation.

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In no particular order (and affiliate link free), these are all easy reads and great resources to get started;

1. Investing in Apartment Buildings
   
2. Multi-family Millions
   
3. The Complete Guide to Buying and Selling Apartment Buildings
   
4. Honorable mention (non necessary commercial re but still great for learning analysis and calculating returns) Investing in Duplexes, Triplexes & Quads
   
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   These will all talk about why multi-family can work better than single family and will familiarize you with concepts such as capitalization rate, its importance, how to calculate it, gross rent multiplier, internal rate of return, cash on cash return etc.
   
   I've grown my re career as an investor over the past 16 years and am still learning new things everyday but for me there is no other tool like it that provides the potential for economic freedom.

Yes I would definitely do it again. In fact I would probably do it more like the way you are doing it -- either renting my own home to save capital for investment properties or living in an investment property. For the latter approach a 4 family is perfect as you can get conventional residential financing (cheaper than commercial and full-term) but it is valued and treated like a commercial property.

For sure there are horror stories in RE investment. But if you think about most of the horror stories you hear, they are either (a) people who buy ramshackle houses in a war zone and are totally unprepared for the reality of slumlording, or (b) people who do not run the numbers with realistic assumptions and find themselves in a negative cashflow situation.

Three things tell me that you are probably in a decent position. One is that you are thoughtful about your approach and analytically minded. The second is that you are looking at larger properties, not single families -- this is (IMHO) a more efficient and professional approach. The third is that you will treat RE as a real job. If you forget about getting rich quick and focus on getting comfortable slowly you will most likely do well.

The general RE book I always recommend to analytical people is this one: http://www.amazon.com/Complete-Buying-Selling-Apartment-Buildings/dp/0471684058/. I like the fact that Berges walks you through his financials in enough detail that you develop a real understanding for which factors affect which outcomes. I also like that he sets realistic expectations and doesn't promise you a trillion dollars in 30 days. Many library systems carry this book so you may not even have to pay for it.

Last, you mentioned BiggerPockets. For some reason people on there are obsessed with the 50% rule and 2% rule. These rules are probably valid in very limited circumstances, like buying Class D properties for cashflow alone. If you are buying A or B properties, or you have a chance to reposition any class of building and benefit from equity gains (as Berges recommends) those rules are completely irrelevant.

First, I want to say, welcome to the wonderful world of real estate. You have a LOT to learn and it takes time. Don't let that discourage you.


Second, anyone financially sophisticated would never put their money in residential for a number of obvious reasons. My guess would be you have only ever bought a house, so that is where you are comfortable. I won't even get into how incredibly inefficient and what a poor investment residential is, particularly trying to buy 400-500 homes. There is a whole list of books you would need to read, just to have a discussion on the topic. To be fair, I will recommend one book you should read immediately ( https://www.amazon.com/gp/product/0471684058/ref=ppx_yo_dt_b_search_asin_image?ie=UTF8&psc=1). I picked this one specifically for you because he actually compares residential to commercial in it.


Third, you would never approach a real estate broker (very strange recommendation by LordAshon). Brokers don't own property's, they get a commission for closing them. Many commercials brokers have no idea what they are doing. The good ones are exceptions and not the rule. 50% of all commercial deals are done without brokers. You don't bring brokers into the deal unless you are ready to make an offer (and they have the listing) or are sending your specific requirements for purchasing. Truthfully though, if you were going to move forward with some sort of portfolio (like hundreds of homes)...you would need an attorney, not a broker.


Fourth, You should find someone who actually has experience in analyzing, making offers, doing due diligence and closing multi-million dollar deals. There is a reason why capital groups have teams of people involved.


What you should be doing, is looking into are capital groups, rather than funds to invest with. Don't lose your friends and associate's money. I can already tell you are going to make a LOT of mistakes that will cost millions. Please don't do that! They won't be friends for long if you lose their capital.

1. What are the actual goals for the group and its members? Tax deduction? Income? Portfolio diversification? Inflation protection/hedge?
   
   Each of these questions has a different answer and strategy related to it. You should group these people together so that interest is aligned in that particular investment.
   
   
2. Where are the funds from each member coming from? Some may use tax-sheltered accounts and others may not.
   
   You need to adjust the strategy to reflect this. For example, if someone is using a self-directed Roth IRA, they can not be invested in any property with a mortgage/lien because the investment is still subject to UBIT tax and negates the whole point of the ROTH.
   
   
   
3. How do you plan to structure the company? LLC's, Trusts? A combination? Some more advanced structures I won't mention (which is where you probably should be)?
   
   
   With the right capital group, you should be able to double your money nearly every 5 years or so (but you have to buy right, to hit these numbers). With $10 million, you should be able to leverage roughly $35-$40 million in assets. In 5 years, that $10 million should grow to $20-30 million. Partnering with a capital group would be the best way to learn the business or just let them do all the hard work for you (do you really want a full-time job?). Finding the right fit could take a year. I can make a couple of recommendations if I knew what your financial goals were.
   
   
   A couple of things to consider, if you don't use leverage and you get sued, you can lose 100% of your equity in that LLC. Leverage is actually quite an important strategy. You need to understand your tax implications to the partners and this should be known before you ever make any offers.
   
   
   As far as markets go (I won't tell you how you future proof your investments using demographics, this is something that should be earned): What I will tell you is all the movement is heading south. 10,700 people retire per day...this will continue until 2023. Millennials are relocating south because that is where the job growth is. Parts of Arizona, Atlanta metro, other areas outside of Dallas/Fort Worth in Texas, almost all of the Florida coastline.

That's a good list, BUT they should be secondary reading, sure you can get insights from them that can relate to any type of investing but you want to be RE specific right? Here is a list I would look into.

Private Real Estate Investment: Data Analysis and Decision Making

Real Estate Finance & Investments

Multifamily Housing Development Handbook

Real Estate Market Analysis: Methods and Case Studies, Second Edition

The Complete Guide to Buying and Selling Apartment Buildings

How to Pay Little or No Taxes on Your Real Estate Investments: What Smart Investors Need to Know

Investing in Real Estate

Real Estate Investing, Cash Flows, and Due Diligence: Making Better Investment Decisions (Volume 2)

What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures

That's a lot, also info in those books may over lap so pick which ones you would want to answer your specific questions. Hope this helps.

This

Especially this

I found a copy of each of these in a book drive I participated in for charity-- paid 25 cents each. Well worth it.