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BiggerPockets Real Estate Podcast

BiggerPockets Podcast 135: Raising Money to Buy 1,000 Apartment Units with Brian Adams

BiggerPockets Real Estate Podcast
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How does someone shift from buying single family houses to buying hundred+ unit apartment complexes? That’s the topic we’re diving into today on the BiggerPockets Podcast with real estate investor and former CPA Brian Adams. This show is packed to the brim with actionable tips and advice for anyone looking to expand their real estate business, quit their job, raise private capital, and work less while enjoying life more. You’ll be inspired and motivated by interview, so don’t miss a moment of it!

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This Show Sponsored By:

b2rfinance-logoWe just wanted to give a shout out to our podcast sponsor on today’s show: B2R Finance
A new commercial lender offering loans specifically for rental investors. B2R Finance could help you unlock equity from existing properties so you can get cash out now.

Learn more by visiting: B2RFinance.com

In This Episode We Cover:

BiggerPockets-Podcast-Cover 300 300

  • The important perspectives Brain gained from his grandfather and football coach
  • How he bought a rental property with a CPA background
  • The impetus he used to change how things were going with his life
  • How to plan and implement a journey to real estate investing
  • The process of partnering with a group
  • Things Brian would’ve done better if he started all over again
  • How to pick your partner’s brain when making deals
  • Brian’s 98-unit deal — that ended up folding
  • What to do when your investors back out on a deal
  • What you should know about exit strategies
  • How he gets paid with kind of deals he does
  • How he plays matchmaker for investors and buyers
  • The importance of the “ABM” (Always Be Marketing) strategy
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Education and the books are fine, but you got to get out there and take some risk.” (Tweet This!)
  • “Let’s follow those who are smart, those who have done this before.” (Tweet This!)
  • “5 percent of a great deal is better than a 100 percent of no deal.” (Tweet This!)

Connect with Brian

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By BiggerPockets Real Estate Podcast
Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investo...
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    Josh James Professional from Wichita Falls, Texas
    Replied about 5 years ago
    Great show, I learned a lot. Very encouraging to hear your advice on getting started.
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Thanks Josh.
    Kay S. from Fredericksburg, Virginia
    Replied about 5 years ago
    You mentioned your focus is value add – how do you manage the rehabs as well as tenant management (since it’s not just day-to-day maintenance – it’s also increasing rents) from living in PA and properties not within a feasible driving distance?
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Kay, for my deals I work with my management company to help me manage the rehab process.
    Anthony Gayden Rental Property Investor from Omaha, NE
    Replied about 5 years ago
    I liked the show. The whole syndication thing sounds like an interesting way to get involved in large multifamily. It was interesting hearing about that HUD deal. I had read about such financing in the past, and I had read others mention that they were very difficult to work. I know that usually these deals involve large multifamily ($5 million or more), but am curious if they could apply to smaller multifamily around the $1 million range.
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Anthony, thanks for you message. The HUD process for me was challenging and I am not certain about HUD programs for smaller deals. I am sure the program criteria is on the their website.
    Tim Butters Accountant from Philadelphia, Pennsylvania
    Replied about 5 years ago
    Great show.. what kind of returns are the typical credited investors looking for?
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Tim, thank you. Returns will vary as each deal is different, but to be helpful for ya – I find a 8% cash on cash and an overall annual return of 15%+ return gets investors excited.
    Brian Christoff from Jeffersonville, Indiana
    Replied about 5 years ago
    Hey Guys, you talked in this show about posting deals on the Forum, I am in need of some feedback on a deal that i have under contract. I have run this deal through the BP analysis software, but i don’t see a way to add the PDF to the forum post so people can see all of the details, the analysis software is great..i really like it..but id like to share it with the community..tips?
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Brian, this is a tech question for BP and I hope you get some feedback on your deal.
    Justin Kling Investor from Franklin, Wisconsin
    Replied about 5 years ago
    I’m looking to 1031 exchange my houses in a couple of years for my first apartment complex so I found your podcast really motivational. I’m also a Tony Robbins fan & attended UPW last year – cool moss, cool moss. Great podcast!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Thanks Justin. If you ever have the opportunity to see Tony in Fiji it is a great experience.
    Justin Hennig Investor from Minneapolis, MN
    Replied about 5 years ago
    Brian, great show! Impressive trajectory sir! You mentioned in the Podcast your 209 unit building was found via direct mail marketing… I am curious what type of messaging / copy you created to approach this type of seller. I ask because it seems multi-family sellers are more savvy and sophisticated (especially as the unit count goes up) than the single-family sellers most direct mail marketers target (Instead of the typical wholesaler messaging “we buy quick for CA$H that seems to be targeting the “Homer Simpsons” of the world). This is a nuanced question, so if you’d consider a private conversation regarding the topic I’d love to chat if you have 3-5 minutes. Thanks Brian!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Justin, thanks for your question. This particular direct mail piece targeted owners who have owned more than 15 years with perceived equity and possibly a burned out landlord. My copy in the letter was designed to rub “pain” around owning the asset so long and providing a solution on how I can help the seller by getting out. Just to mention, I still use the letter and don’t share it. :))
    Akachi Azubuike from Grand Blanc, MI
    Replied about 5 years ago
    Great show, Brian! Its a pleasure to have access to someone sho is doing such amazing things! Anyway, I have some questions. Most gurus say that investors should find the market first, then the property. Some say find a market with 2% two year job growth and 2% two year household population growth. 1. Do you agree with this? 2. If not, How do you decide what markets to send mailers to? 3. What publication do you use to get that information? 4. What are your thoughts about investing in the path of progress? 5. How many mailers do you send a month? Thanks!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Akachi, I am not a guru but agree that to be successful in owning large multi’s or any real estate for that matter you need to be an expert in the market you are targeting. Marcus & Millichap has great market data and I like opportunities in the path of progress where things are happening. Funny – today I just went under contract on a 130+ unit deal and have a 1000 units in my pipeline. I haven’t sent mailers in awhile so will be gearing up probably in September so will let you know.
    Yasmine Bisumber Realtor/Investor from Miramar, FL
    Replied about 5 years ago
    Brian, you are a true action taker. Thanks fir sharing, I learned a few things and the gears started turning.
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Yasmine, thanks for your message. Sometimes it is a small nugget of info that will get the gears started. And getting started is better than just thinking about it and not taking action. Best wishes on your journey!!
    Deshan Kennedy Real Estate Agent from Fredericksburg, VA
    Replied about 5 years ago
    Great podcast!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied about 5 years ago
    Thanks Deshan
    Shane Rupe Investor from Grand Island, Florida
    Replied about 5 years ago
    I would like to say that it was great listening to your story! I found it to be inspirational regarding how you changed your career path and mindset drastically and went for your dreams. This is food for the soul! I greatly appreciate you taking the time to share your experiences! I liked your reference to using a VA seeing that is a great way to solidify the 80/20 rule in your business. I’m a new real estate investor that is currently undergoing a residential redevelopment project as my first real estate investment. I’m looking forward to working more with the real estate community in order to gain knowledge and share knowledge I have gained with others. Thanks again!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied almost 5 years ago
    Shane, thanks for your message.
    Sam Bates Rental Property Investor from Dallas, TX
    Replied about 5 years ago
    Brian, Awesome show and thanks for sharing you story! I found it to be very inspiring and similar to my story. I’m an accountant by day and real estate investor by night. I want to start my own multifamily real estate company soon. Can you share more details on how you financed your first few multifamily deals? The reason I ask is I’ve created a partnership with an old co-worker looking to invest in apartments. We both have experience in single family homes, but no multifamily experience except I’ve been a passive investor in a deal. The banks we’ve spoken to say they won’t lend because we lack experience. Did you come across this problem? Another issue we have is we have passive investors lined up to invest in some deals, however, the banks have told us our (guarantors) net worth has to equal the loan amount and our liquidity has to equal the equity amount plus post close liquidity. These two statements puzzle me because of all the syndications that are created to buy apartments. Did you come across these requirements? To circumvent these requirements did you purchase your apartments with all cash? Any information would be greatly appreciated.
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied almost 5 years ago
    Sam, for my deals I use a combination of debt and private equity. Two of my deals the debt was provided by a bridge lender. Bridge lenders are a bit more aggressive with their loan to value and how much they will fund, but since they are taking on more risk generally the fees and rates are higher than traditional lenders. The information you are getting from banks about lack of experience is correct. For net worth and liquidity, usually the net worth of the sponsor is equal to or greater than the loan amount and the liquidity is 10% of the loan balance. I also came across both of these situations and it can be frustrating when you are first starting out, but each are solvable. Meaning you need to find a partner or financial backer to get you and your co-worker over the hump with the lenders. If you are able to find a smoking deal, but lack the experience to get it closed, seek out an operator/sponsor that is already doing this business and structure a deal with them so you can get into the game. OR since you have passive investors lined up and to establish your own credibility, you can get into a deal by raising money for the operator. Caution though – before you head down this pathway make sure you understand the SEC rules and speak with a securities attorney so you don’t get yourself into trouble. When you lack management experience, one strategy I used before that was successful is form a partnership or strategic relationship with a reputable management company where the asset is located. The management company is part of your team and the banks will look at your team including the management company and this could get you moving forward with multifamily deals. Good luck!!
    Erik Hemingway Investor from Wilmington, North Carolina
    Replied almost 5 years ago
    Hey Brian, Just listened to your episode and loved it. I particularly liked the mindset of being willing to go for the ‘bigger fish’ They are out there and someone will do them, may as well be you (us!) My background is in self storage, but I have been a one-man-show. I’m anxious to take your advice and pursue value-add, partnerships on larger or multiple facilities. It would be great to connect at some point. Feel free to reach out. I understand you’re extremely busy, but pop me a note if you get a chance. All the best, Erik
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied almost 5 years ago
    Erik, thanks for your message. Send me a colleague request so we can stay connected.
    Gurwinder Singh Investor from Hicksville, New York
    Replied almost 5 years ago
    Great show Brian. Very educational and inspiring. Does one have to be an accredited investor to invest with you? What are other conditions to invest other than the minimum that you mentioned in the podcast?
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied almost 5 years ago
    Gurwinder, thank you for your message. My deals are structured to work with accredited investors at a minimum investment of $100k. Other conditions are we have a call to discuss what your financial goals to see if you are a fit for this type of investing. I want to set a level of expectations and understand what your questions are so you have clear understanding how my investment model works. We also go over what the risks are of investing in real estate and many other topics. Send me a private message if you would like to setup a call to discuss further.
    Brock Adams from Chapin, South Carolina
    Replied almost 5 years ago
    Good Show Brian and BP. Great questions, answers and drill down. Yes, It is about relationships! Circle of influences very key. More than you know. As a financial advisor clients trust you with their money, as a CPA, clients trust you with their money. You already see what they make or don’t make in your position so if you can bring them an opportunity to reduce taxes or increase income it is very appealing. For others, It is difficult but not impossible, for the average person to Build Their Team. I think this is an important part of the model. Got to have your A team. So true Brian, Alway Be Marketing
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied almost 5 years ago
    Brock, thanks – it is funny though, when I started down this pathway to raise money for my deals, most people knew me as “Brian the CPA” and in the beginning it took a while to gain traction. As you mention my CPA helps, but what got the ball rolling for me in the beginning is I did exactly what I told the investor I was going to do and was able to deliver results -i.e. returns/cash flow. You don’t need to be CPA or financial planner to do that or gain trust from an investor…
    Brock Adams from Chapin, South Carolina
    Replied almost 5 years ago
    Absolutely Brian. Good, Honest and transparent is what everyone appreciates.
    Jason Baron Investor from Quincy, Massachusetts
    Replied over 3 years ago
    I just listened to this today and really enjoyed it. Thanks so much for the great insights!
    Brian Adams Syndicator of Large Apartment Buildings from Glen Mills, PA
    Replied over 3 years ago
    Thanks Jason
    Nathan G. Real Estate Broker from Cody, WY
    Replied almost 3 years ago
    Just listened to your show and really enjoyed it. I’m not there yet but am studying, saving, and preparing for a break into large multi-family in a different market. I appreciate the information you’ve shared.
    Mike H. Investor from Nashville, Tennessee
    Replied over 1 year ago
    Great show. Thanks for the information shared.
    Joseph M'Mwirichia Rental Property Investor from Sarasota, FL
    Replied 5 months ago
    Great episode! Have always been interested in multifamily, my target number of units to acquire/control over the next 10-15yrs is set. This show gave that vision more life.

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