income and your DTI as a rule will need to be roughly 43 percent. When you buy commercial real estate, your lender will provide a loan based in large part on the prop- erty’s ability to pay or cover its own debt service (principal and interest). The higher the profit from the prop - erty, the more loan they are willing to provide—up to about 80 percent in today’s market. To illustrate this point, I paid all cash for my personal residence in 2010 because I was following the dogma of “debt is evil.” Once I got educated in commercial real estate, I realized that I should not have paid cash and should have gone to my bank to take out an 80 percent loan on the property that I owned free and clear. The banker basically laughed at me because I didn’t have a job (I had retired the previous year). My only option to unlock all of that “dead” equity in my house was to sell and move into a rental myself. Nine months later, I bought my first apartment complex for 1.6M with a shiny new loan of $1,137,000 and still with no job!
ly know what you were doing then either, but you learned what you needed to and now are proficient. The same will happen in multifam- ily if you are open to learning and breaking out of your comfort zone to follow a proven path. When you combine the benefits of multifami - ly investing with the ability to raise money, you would be amazed at how different things can be for you and your family. •
5. EASIER TO MANAGE Compare two different real estate portfolios, one consisting of five single-family rentals and one with a 100-unit apartment complex. For the person with five single-family properties, they will likely be driving all over town to manage the show- ings, maintenance, inspections, etc. That investor has just bought him/ herself a JOB! The investor who has the 100- unit apartment complex has all 100 units under one roof, which doesn’t require moving around the city to manage it. 6. SAFER AND MORE CONSISTENT If you own a couple of houses and have one vacancy, you are 50 percent vacant, which chops your income and potential profit in half until you get it re-leased. With 100 units, 10 vacant still leaves 90 contributing rent and profit. Many naysayers argue that they don’t have the money or know-how to invest in multifamily. Remember when you bought your first rental house? You didn’t real -
Known in the real estate world as the Apt-Guy SM , Bruce Petersen is a serial syndicator who started with a 48-unit building and has now syndicated over
1,100 units. As the founder and CEO of Bluebonnet Asset Manager LLC and Bluebonnet Commercial Management, Bruce is a #1 Best Selling Author and has received local and national recognition for his syndication efforts. He was the recipient of the Austin Apartment Association’s Independent Rental Owner of the Year for 2016 and the National Apartment Association’s Independent Rental Owner of the Year for 2017. In addition to being a TV personality and public speaker, Bruce is also an educator with a focus in multifamily investing and syndicating.
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