Think you need big cash and experience to do multifamily apartments? Well, Lance Edwards is living proof that you can start with multifamily investing - just like he did and using none of his own money. Utilizing the multifamily apartment strategies he now teaches and writes about, Lance retired from his job in July, 2005. For more information on how you can achieve financial freedom using other people's money, visit http://www.ApartmentWealthMachine.com
The word "investor" is quite a general term that means different things to different people. Dictionary.com defines an investor as "someone who commits capital in order to gain financial returns". So what does this mean in terms of real estate investing? There are three types of investors: lending, equity and hybrid (or combination). Here is a breakdown of these three types of investors.
A lending investor is someone who will loan you money on a multifamily apartment deal. You will pay them an interest rate and you retain 100% ownership of the property. You will pay them back on certain terms at a certain time.
An equity investor is someone who will give you the money but they want a percent ownership in the property. In return, they get a percentage of the cash flow and a percentage of the appreciation. They are going to cost you more money but they may have some other benefits such as not requiring any monthly cash flow.
A Hybrid or combination investor is someone who can receive an interest rate and equity participation in the project.
From the investor's point of view, whether they choose to be a lending, equity or hybrid investor depends on their investing needs. We are talking about mutual needs. Do they need monthly income or do they desire something for the future? It is a meeting of the two objectives and this is where you get down to their investor profile. You want to match your multifamily investment product to their profile.
The documentation for the type of investor will vary. This is in reference to once they have committed to the multifamily apartment deal and the documents that you will put up to define the transaction and to create the promissory note and security instrument. This will be easier with a lending investor.
All three of these types of investors have merit. As a general rule, lending investors are preferred because you do not have to pay as much return. Equity investors are going to end up costing you more money but they may have the benefit of not needing any monthly cash flow.
One type of investor is not necessarily better than another. It really is dependent on what suits your investng needs at that point in time. Generally speaking, you will pay less return with a lending investor.
Knowing what investor you need to deal with on a project is very important. If you know the type of investor you are dealing with then you will know how to "package" the product. You will be able to determine how to match your multifamily apartment investment product to their needs and meet your needs as well.
- Related Videos
- Related Articles
- Ask / Related Q&A
- Applying a Business Guru's Insight to Multifamily Apartment Investing - Part 1
- Applying a Business Guru's Insight to Multifamily Apartment Investing - Part 2
- 401K, HELOC and Other Options You Can Use to Fund Your Multifamily Apartment Deal
- How to Get Predisposed Private Money for Multifamily Apartment Investing
- How You Can Raise Private Money to Buy Multifamily Apartments
- 4 Areas of Asset Management of a Multifamily Property
- 5 Lead Generation Resources For Finding Motivated Multifamily Sellers
- Investing: Top Ten Reasons Why You Should Buy Multifamily Properties
All About Title Loans
By: Limadijaya Suhendra | 06/01/2010Using the automobile as collateral, title loans are secured loan and no limited to title loans itself. Title loans are different than other regular loans which should have to wait for several days for the loan to be approved. You can find the title loans application fully processed within 30...
A Brief Review on Stafford Loan
By: Limadijaya Suhendra | 06/01/2010The most famous student loans is Stafford loan. It is widely available and is backed by the United States Federal Government. Nearly all students are qualified for Stafford loans despite of their credit ratings. There are two types of Stanford loans which are subsidized and unsubsidized. A student may determine...
Private Loan
By: Limadijaya Suhendra | 06/01/2010Human beings as creatures of God endowed sense. Have a variety of dreams, hopes, and desires. Often, these dreams are not achieved because the knock on the financial problems. Despite having a steady income as an employee or entrepreneur. But not necessarily guarantee to meet all the dreams and hopes...
Library Grants, What Would We Do Without Them
By: Gregory G Grundl | 06/01/2010The fedral government has many grants that anyone can apply for. One might argue this is a waste of tax dollars. Keep in mind all that has been accomplishd with grant money.
Facts to Remember Regarding Your Credit Score
By: Tony Francis | 06/01/2010Regardless of what might be your actual credit score, the facts about it remain the same. It will always be the basis of credit companies. It will also range from 300-850 (FICO or Fair Isaac Scoring Method) and 501-990 (The Vantage Scoring Method). The score will also be based on...
The Truth About Your FICO Score Unveiled
By: Tony Francis | 06/01/2010FICO is an acronym for The Fair Isaac Company. It is actually a company who is responsible for the creation of the formula used in calculating a consumers FICO score. A FICO score, on the other hand, serves a basis to credit companies whether to grant or not to grant...
Save Money So You Can Buy What You Really Want
By: Sherry Tingley | 05/01/2010Sometimes creating a plan to save money each and every month can be challenging. Learn some easy ways to save money. Set goals for saving enough to purchase what you really want.
Get Rich With Crude Oil Trading In 2010!
By: Ahmad Hassam | 05/01/2010Oil drives the global economy. Oil wells are being pumped as never before. It is just a matter of time before these oil wells will get dry in the next two to three decades. High demand for oil in the global economy with no supply will skyrocket the crude oil prices. If you can position yourself for crude oil trading in 2010, you can make a fortune!
5-Step Process to Financial Freedom Through Real Estate Investing
By: Lance Edwards | 12/11/2009 | FinanceYou have learned how to create a real estate business. But at the same time, you want to create your net worth. The steps to getting this done are a 5-step process. Not only can you apply this process to your business, but you can apply it to your personal life.
Investing: Top Ten Reasons Why You Should Buy Multifamily Properties
By: Lance Edwards | 09/11/2009 | FinanceWhen you sit down and examine the advantage of owning multifamily properties, you will be amazed at the multitude of benefits. While other avenues of income generation offer some attractive incentives, owning multifamily properties brings many great things to the table. Let us explore these advantages:
Investing: Types of Investors for your Multifamily Deals
By: Lance Edwards | 02/11/2009 | FinanceThe word "investor" is quite a general term that means different things to different people. Dictionary.com defines an investor as "someone who commits capital in order to gain financial returns". So what does this mean in terms of real estate investing? There are three types of investors: lending, equity and hybrid (or combination). Here is a breakdown of these three types of investors.
Investing: What a Multifamily Property's Class Can Tell You
By: Lance Edwards | 30/10/2009 | FinanceWhen you are dealing with multifamily apartment properties, it is very important to understand the different classes of properties. The class that a property is assigned can tell you a lot about the property and if it is worth your time and money to invest in. There are four different property classes: A, B, C, and D.
4 Areas of Asset Management of a Multifamily Property
By: Lance Edwards | 21/10/2009 | FinanceThe ability to improve your multifamily apartment property boils down to you being a good asset manager. The purpose of asset management is to increase equity by raising NOI to cap out the property. Asset management boils down to four areas: property management, repositioning, adding income sources and reducing expenses.
10 Creative Applications for getting your Apartment Investing Deals Done
By: Lance Edwards | 19/10/2009 | FinanceWhen you are trying to figure out how to get your multifamily apartment investing deals done, there are techniques that you can use to do so. Any one of these techniques can be used individually or in a combination. They can be applied by rehabbers, wholesalers or buy and hold entrepreneurs.
3 Ways to Reposition Your Multifamily Property
By: Lance Edwards | 11/10/2009 | FinanceAre you trying to figure out a way to raise the rent on your multifamily apartment property? You can raise rents through a process called repositioning. Whenever you buy a property and make improvements or repairs or convert a property from a Class D to a Class C or a Class C to a Class B, you are repositioning. There are three ways you can reposition your multifamily apartment property.
Buying Multifamily Properties and Overcoming Your Fears
By: Lance Edwards | 03/10/2009 | FinanceIt is our job as entrepreneurs who are raising private money to learn how to direct energy, other people's energy, into vehicles that produce more income for us and for them. It is all about managing the energy. You have a choice when it comes to raising private money for real estate investing: you can put your energy and time into a deal or you can put in your money into a deal.