How To Buy Your First Apartment Building

resource-thumb_How To Buy Your First Apartment Building

Brian D. Milovich

Managing Principal, Calvera Partners

While buying a single-family home might sound like a good idea because you don’t need too much cash for a down payment, it’s awfully risky. Why? Well, if and when your tenant leaves, so does your cash flow. When it comes to property management, I like the diversification that comes with a multi-unit or apartment building. One bad apple won’t sour the entire bushel.

So, how do you make the leap to owning a real apartment building? It may seem daunting since it’s more expensive and the management burden is greater, but here are five tips to get you on your way:

  1. Do your homework – People live in apartment buildings for a reason. It’s close to work, it matches a financial need (either budget or luxury), or it’s near entertainment or other desirable activities. Make sure you can answer the question “Why do people live here?” so that there’s still a reason to live in your building should a recession, company relocation, or other event happen in your community.
  2. Make friends with your banker – Unlike a single-family home, it’s difficult to find 80%+ financing for apartment buildings. It exists, but it’s not for the faint of heart. The best way to position yourself to find debt that works for you and your building is to network with your local real estate banker. If you’re honest with them, you’ll know your parameters and they’ll become your trusted partner.
  3. Keep an eye on your broker – I like apartment brokers, I really do, but be careful. Not only are the numbers in their investment packages never correct, they still only get paid to sell you something. Trust but verify.
  4. Let someone else manage it – No property manager will ever operate your building like you would. However, your time is far too valuable to deal with the dreaded stopped up toilet or to go on numerous leasing tours. Plus, in apartments, the fee that property managers charge is much less than the single-family home industry.
  5. You must believe – The hardest part of the move to apartment ownership is finding equity. For those of us who didn’t receive a large inheritance from a distant relative, where does one start? Hopefully you’ve saved up a decent amount to get started. No potential investor wants to invest with a sponsor who isn’t willing to “eat his own cooking”. If you’ve found a compelling deal that you believe in 100% and are willing to put a meaningful personal investment in, you’ll find others willing to do the same.

Protecting and growing your cash flow is the way to move forward in real estate investing and apartments are the best way to accomplish that.

Also, it’s okay to start small. Finding a 5-unit property is much better than one single family home. Having 5 times the diversification will show you the ropes in multi-unit investing and you’ll want to parlay that into a 10, 20, or 100 unit building in the future.



Click here for more information on the Calvera Income and Growth Fund.

Or to find out more directly from a member of our Investor Relations team, click here.

2 Embarcadero Center, 8th Floor
San Francisco, CA 94111

729 Washington Ave N, Suite 600
Minneapolis, MN 55401




Performance data listed in this website or is otherwise provided by Calvera Partners, LLC, or its affiliates (“Calvera”) with respect to a particular property or project represents past performance calculated for the relevant project and does not purport to reflect the overall performance of any private funds managed by Calvera, which may include other projects, as well as charge additional fees or carried interest, or have additional expenses, which would reduce the overall performance of the project from the perspective of a fund investor. Past performance does not guarantee future results; Current performance may be lower or higher than performance data presented. Calvera is not required by law to follow any standard methodology when calculating and representing performance data; the performance of any of Calvera’s projects may not be directly comparable to the performance of other investment vehicles or funds; and qualified potential investors can contact Calvera Partners for more current performance data of any private funds managed by Calvera. 

This website is provided for informational purposes only. Nothing contained in this material is an offer or solicitation to buy or sell any security. In addition, (i) any securities offered to investors that respond to any general solicitation or general advertisement made by Calvera, may be sold only to accredited investors; (ii) such securities will be offered in reliance on an exemption from the registration requirements of the Securities Act and such securities offered are not subject to the protections of the Investment Company Act or required to comply with specific disclosure requirements that apply to registration under the Securities Act; (iii) Neither the SEC, nor any state securities regulator, has passed upon the merits of or given its approval to any securities offered by Calvera, the terms of the offering, or the accuracy or completeness of any offering materials or the accuracy or completeness of any of the information or material provided by or through this website; (iv) the securities will be subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities; and (v) investing in securities involves significant risks, and investors should be able to bear the loss of their investment. Please click here for additional important disclosures.