There are many advantages to investing in multi-family real estate. Historically, it represents a more stable class of commercial real estate, and rising home prices continue to drive demand for rentals. By investing in affordable multi-family projects, particularly in locations with inadequate housing supply, such as Southern California, you can also help improve your community.
If you’re already heavy in stocks and bonds and/or commodities, commercial real estate investing is a great way to diversify your portfolio. One way in is to buy a property yourself and then rent it out or flip it. This option involves a lot of time and hands-on work, and is definitely not right for everyone. Most investors find it more practical to join forces with other investors, owning partial stakes in jointly funded commercial deals. That way, you can trust experts in site selection, design, entitlements and other complex areas of real estate development to oversee the project while you contribute to the funding. You reap the financial benefits without having to become a landlord!
If you’re an accredited investor you have access to deals the general public does not. Still, to get started in multi-family real estate investing, you have to first find the development deals. If you’re new to real estate investing, you might not know where to look. Here are four ways to source multi-family real estate deals.
Just as you would with most decisions, from hiring a new employee to buying a car, you can learn a lot by asking people you trust about their experiences. Spread the word to people you know that you’re on the lookout for the right multi-family real estate deal. Tap colleagues, your alumni organization, your professional membership groups, and your knowledgeable friends. A personal referral can go a long way to building your confidence in the people behind your chosen project. Then, if you can, get to know the developers yourself. Make sure you get a good vibe and that your goals are compatible.
Crowdfunding is another way to go, and some newer online platforms facilitate finding deals. Realty Mogul, Paradyme Equities, Equity Multiple, CrowdStreet and Fundrise are examples. These platforms will include off-market properties, but they also serve a lot of investors, so these deals aren’t exactly secret. Some require accreditation and some do not. Deals offered through crowdfunding platforms are typically high risk, high reward. While the technology can be convenient, the lack of personal touch frustrates some users. If you’re someone who prefers to make a direct connection with a developer before investing, you may not want to choose this route.
Your financial advisor has the clearest picture of your situation and can advise on what funds to invest and where. They also have their finger on the pulse of the investment world and know a lot of people. Let them know that you’re interested in investing in commercial real estate, and find out who and what they know. They can work with you to direct your IRA or other investments to EFTs, REITs or real estate mutual funds, as well as showing you where you can invest directly in early stage projects in your city.
Another type of professional who can offer insights into available real estate deals is, of course, a broker. Since they’re licensed and required to engage in continuing education, brokers know the commercial real estate landscape well. They can spot opportunities and pitfalls that you might not if you’re newer to real estate investing. Look for a real estate broker with experience in developing multi-family properties, ideally in the city or region where you want to invest. Get recommendations from your network and choose someone you feel you can trust.
If you’re a broker yourself, take a look at our bonus compensation structure for broker-partners.
The good news is, since you’re already here on the Beach City Capital website, you’re just one click away from discovering a range of exciting commercial real estate investment opportunities. We currently have four ground-up development opportunities for multi-family and mixed-use projects in various stages of pre-development. We are seeking to capitalize $150 million worth of development projects with debt, LP equity, and retail investors. We are currently offering up to $5 million of retail equity to accredited investors. If you’re an interested accredited investor, click here to create an account.