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Buying Multi-Family Properties: What’s All The Hype About?

Ben Leybovich
3 min read
Buying Multi-Family Properties: What’s All The Hype About?

I recently had the opportunity to join Mr. Joshua Dorkin and Mr. Braaaaaandooooooooon Tuuuuuuuuuurneeeeeeeeer (and the crowd goes wild!!!) for a BiggerPockets Podcast 61.  This was, indeed, an honor for me.  Guess who was the first ever guest to return for a second show?  Tada…yours truly; the one and only Ben Leybovich.  Drum roll…taking a bow, with a look of proud satisfaction on thy face!

Right out of the gate, the first topic of discussion was – Why Do People Buy Multi-family? I think that everyone at the “virtual coffee table” agreed that the most basic premise behind income-producing assets such as multi-family is indeed INCOME.  In this article, though, I’d like to put a human face to this concept – people I know truly are benefitting in their lives from the income resulting from multi-families…

TRIP TO CINCINNATI

About 4 years ago I took an impromptu trip to Cincinnati – about a 2 hour drive.  The occasion was that one of guys I went to conservatory with came into town for a day to audition for an opening in the Cincinnati Symphony Orchestra.  I hadn’t seen him in about four years and thought that we would have fun catching up…

Well – about ten or twelve of us ended up getting together.  It was great to see all of these people I went to school with. We went to a local watering hole – haha, I’ve always wanted to say watering hole.  Actually it was a nice restaurant where we were seated at a big long table, and we talked, and talked, and talked…

Most people talked about music, their careers (or lack thereof), musical instruments, jobs, auditions, etc.  But, I did not get to talk about those things.  You see – I happened to sit across from a gentleman who graduated one year after me (I think) – let’s call him Max.  This dude couldn’t shut up about real estate; I mean he kept going on, and on, and on.  He literally sat directly across the table from me and completely monopolized me for the entire 3 hours at the restaurant.  I actually felt bad; one of my professors from college was there, and neither her nor any of the other classmates got any attention from me.  Truth be known – I’d rather talk RE than how to get a job in an orchestra that’s going to go on strike every 3 years any time of day.  But, I truly did feel bad about basically ignoring everyone else; including the guy I came to see in the first place…

Turns out that while Max and I hadn’t exactly keep in touch once I left school, he did in fact keep tabs on me through the proverbial grape-vine, and knew that I had been buying property.  He, as most of us, had read Rich Dad, Poor Dad, and was admittedly utterly fascinated with the topic.  He wanted to get in the game, but didn’t know where to begin…

DO YOU HEAR BELLS RINGING?

There is an old Russian proverb which doesn’t translate well but kinda goes like this:

You hear bells, but you don’t know where they are or how to look for them…

Has this happened to you yet?  Have you ever experienced sensing that an opportunity exists but not having perspective on what it is or how to capitalize?  That was me at one point as it related to investment property, and this was Max.  He was so close, and yet so far away…

I WORKED WITH MAX

It took 2 years worth of long telephone conversations.  Perspective takes time!  But, then it happened – I received an email with a spread-sheet attached.  It looked good.  This was a brick 4-plex within a 5-minute drive from his house – he was comfortable with the location.

He ended up buying that building!  And this is where we get to discuss the question of why people buy multi-family…

ONE YEAR LATER

Max and I talk on the phone a lot – not as much as Brandon Turner and I, or Serge Shukhat and I, but that’s only because for now Max actually has a job; otherwise he’d be talking RE as much as we do 🙂  Well – he called me about a year following this acquisition and literally said the following:

“Ben – the only reason I can afford child-care services for my baby is because of the Cash Flow from the 4-plex I bought a year ago.”

Yep – Max and his wife were expecting their first-born at the time of this acquisition – a beautiful little girl named Maxene 🙂  The plan was to use the plus or minus $700/month of cash flow to help pay for child care, and it worked out rather well.  It hasn’t all been smooth – managing tenants never is, but by and large IT WORKED!

How’s that for why people buy multi-family?!

Related: The 50% Rule: How to Quickly Analyze a Multifamily Investment Property [Video]

GUESS WHAT…

Yesterday Max called to inform me that he had closed on his second 4-plex!  He had been working on this one for over 6 months.  It’s around the corner from the first one, and should do very well for Max indeed.  Congratulations my friend!!!

And guess what – Max and his wife are expecting again.  This time they are having a boy, cause Max said so…  And if he is right and they do have a son, I wouldn’t be surprised if they name him Ben…:)

What kind of positive experiences have you all had with Multifamily? Let’s discuss…

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.