In a past couple of articles, I have emphasized a couple of important ways that multi-family investments optimize your investment liquidity.
Just to refresh, your liquidity is reflected by how much of your available cash you either have readily available or have in an investment that can easily be "liquidated".
Liquidity is king in the world of multi-family investing because it gives you the leverage as an investor to be able to act and act quickly on the best opportunities that arise.
There are two primary ways to pursue multi-family buildings that leave your valuable liquidity intact.
One is to secure seller assisted financing to complement a bank loan, leaving you with little to no money of your own in the deal.
The other is to use other people's money (or OPM) in place of your own cash.
Each has its advantages and drawbacks and my focus in this article is to help illustrate how your presentation of the upsides to a multi-family investment can help you attract funding.
The key to attracting funding is to remember why you are investing in these properties in the first place.
Multi-family properties are ideally purchased at a discount, are located in areas where time and natural market conditions will increase their value, and produce cash flow.
This time tested benefit of multi-family property ownership is a huge plus when securing funding for your deals.
The current economy has left investors of all confidence and portfolio levels scrambling and looking for a safe haven for their money.
Opportunities that can be shown to be secure are naturally popular in the current economy but are usually low yielding.
A multi-family property with positive cash flow is a secure place for investors to place funds because the "business" can clearly sustain itself during the term of the investment.
Properties that have long-term potential or that look to be good investments for the long run are usually speculative in nature.
You may have enough confidence to invest speculatively in real estate but your funding sources will likely not follow suit, especially after what has transpired the past few years.
Funding sources want to see cash flow, because cash flow is what earns them interest and protects their total investment.
It's nothing personal but funding sources would rather the property back up their investment than you personally, as it will generally be seen as stronger collateral.
When investors compare your investment opportunities to others, they will see one that is higher yielding, flexible, and secure.
The last part, the security, is created by your property's cash flow.
Private lenders and bankers alike may see the value in what you are doing as a multi-family investor.
Don't forget to show them this value when you present opportunities and your success in finding funding will increase.