BiggerPockets Podcast 126: From 0 to 400+ Units Through Value-Add Investing with Brian Murray

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Building a real estate empire takes time, effort, and significant amounts of capital. However, as our guest today shares with us, it’s not beyond your reach! Learn how Brian Murray built a real estate portfolio to over 400 units using a variety of strategies and intelligent techniques. If you plan on building a large real estate portfolio in your future, this is a CAN’T MISS episode!

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In This Episode We Cover:

BiggerPockets-Podcast-Cover 300 300

  • How Brian got started with real estate
  • Why he invested in commercial office space
  • The techniques he used to get the place rented
  • What exactly assuming the loan of the seller means
  • A discussion about Capitalization Rates
  • Value added investing
  • How to use the 50% Rule with commercial properties
  • The value of putting money back into the property
  • How he manages his properties and his specific views on it
  • How to find great deals
  • Tips for real estate investors on getting started
  • His biggest success and biggest mistake
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “You can’t expect anyone to treat your property as well as you do yourself.” (Tweet This!)
  • “You’re gonna see far better returns if you invest yourself and your time into your properties.” (Tweet This!)
  • “A lot of people they think that a property is not for sale, everything is for sale.” (Tweet This!)
  • “Grit is living life like a marathon, not a sprint.” (Tweet This!)

Connect with Brian

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. Darren Sager

    Wow, what a GREAT Podcast! This is one of the best Podcasts where real strategies for wealth creating is actually revealed. Brian Murray you’re amazing! I find a lot of similarities between what you’ve done and I’ve done, however your plan was on steroids and taken to the nth power. How can there not be more comments on this Podcast already??

    So sorry Josh and Brandon, BP needs more podcasts like this versus ones like Grant Cardone. He’s a nice guy and has plenty of enthusiasm (Grant) , but Brian Murray is a GOLD mine and he gave real strategies to all of us who are not flying around in a jet and purchasing thousands of units in large blocks at once.

    And Brandon great tip about going around in overalls and asking about service issues! You should have shared that many podcasts ago!

    • Brian Murray

      Thank you so much Darren for the positive feedback!! It was really a pleasure to be on the Podcast. BiggerPockets is a great community and listening to the Podcasts has been inspiring to me personally. I learn something new every single episode. I’m grateful to have had an opportunity to give back a little by sharing some of my stories and things that I’ve learned.

  2. Mehran K.

    One of my favorite episodes so far. Thanks Brian. I may need to re-evaluate leaving my W-2 job the second my cash flow replaces my W-2 Income, Bah! 🙂 I will have to create another stream of income that includes freedom maybe 🙂

    • Brian Murray

      Thanks Mehran! Yeah, sorry about that! =) Of course there are quality of life considerations that should weigh into your decision also. But if you can stick it out for awhile longer and reinvest the money you would have otherwise pulled out, then you’re in a better position to reap greater rewards down the road. Best of luck to you! Thanks again for listening, and for the positive feedback!

  3. Krystal James

    Brian, this has been an inspirational podcast! I have greatly enjoyed hearing about both your successes and lessons during your real estate investing adventures. There so many golden nuggets of wisdom I am going to have to listen again!

  4. Aleksandar P.

    Brian, this was an amazing podcast. A ton of useful advises and tips. I just finished listening it tonight and I have to admit that this was one of the best BP podcasts so far.
    Man, keep doing a terrific job. You are a great inspiration to all of us looking to start in commercial/ multi-family RE.

  5. Daniel Ryu

    Brian – that was a great podcast!

    Great insights. Investors can learn a lot from it.
    One thing I loved, and I noticed this trend with successful syndicators and money managers that I’ve interacted with, is the creativity involved in your dealmaking. That’s part investing that I really enjoy. Creating value for everyone based on knowing the other person’s need and just being knowledgeable about what’s possible.

    I thought:

    1. Assuming the bank financing and saving the seller the early repayment fee and then using that toward your down payment – awesome thinking! As well as closing early in the month and using the prorated collected rent toward the down payment as well.

    2. Repositioning certain spaces as office space – another great idea. I was just at a very nice new building that has a bunch of trendy restaurants and bakeries, etc, in Seoul (I’m currently living there), and I noticed right by the front door, by the wall, was a very small flower display with a few flowers for sale, that I assumed is leased to the flower shop running that display. I thought – wow, great use of that wall space to rent out to a flower shop. Not sure if that space is big enough for the flower shop to actually make money, but it’s a great way for them to advertise their brand through all the walk-in traffic.

    Anyways, I had a question about the downside risk when you paid about $20K to get the reappraisals and other paperwork done to assume the seller’s bank loan.

    Was that $20K an amount you were comfortable ‘gambling’ in case the bank didn’t approve your assuming the seller’s loan? Or did you have other exits in mind or other ways of mitigating that risk?

    If it was an amount your were comfortable gambling based on what you thought you could do with the building if it worked out, how did you price that risk? Did you think something like – “I’m willing to gamble up to 5% of the equity I think I’ll be able to build in my first year of operating the building?” How can that risk amount be appropriately priced in your experiences?

    • Brian Murray

      Thank you Daniel! Appreciate the feedback and I love your example of the flower display. In addition to converting the locker rooms and storage rooms that I mentioned in the podcast, we also converted about 2/3 of a common kitchen area and a common hallway into office space.

      With regards to the $20K, a good chunk went toward the third party reports such as the appraisal, Phase I environmental, and physical conditions assessment. But I did have the opportunity to continually re-assess as things moved forward. A significant piece of it was the legal fees I incurred as I navigated the mortgage assumption.

      To answer your question, I took a gamble. It was a compelling enough opportunity that I just decided to go for it. There was no specific ratio or percentage that I used- I just used my best judgement in weighing it versus the projected upside potential.

      Knowing what I know now, I feel I was quite fortunate. I’ve since invested funds up front in deals that never closed. I make the best decisions I can and try to just accept it as a cost/risk of doing business. The seller lobbied the bank on my behalf so I think that may have helped my cause. I also agreed to the creation of a debt service escrow, which helped.

      Thank you again for the feedback- good luck, and let me know if you have any other questions!

      • Brian Murray

        By the way, one other income value add for that property- because the parking lot was so big and there was a shortage of parking in the area, after closing we approached surrounding businesses and leased them parking spaces.

        • Daniel Ryu

          Those are great ideas.

          I can’t go into a commercial space now without looking around and thinking about how efficiently the space is being used and wondering where the ‘value’ add is. It’s definitely addicting.

          Alright.. that makes sense on the risk management. Going forward, getting feedback, thinking about if it’s worth the next ‘phase of investment.’

          Great actionable advice. It’s a pleasure to learning from you. I think our philosophies align.

          I’d love to hear your stories (perhaps on a future podcast?? ^^) on how you scaled up to 11 employees and made the decisions that went into hiring and vetting.

          Take care!

  6. Tom Lafferty

    Great podcast Brian! I always love stories about people who made a big leap in a smart, calculated way.
    There are a few items I wanted to offer a different viewpoint on for those that may be considering multifamily. You mentioned that purchases should only be made on actuals, and you shouldn’t pay for performance that isn’t there. In my experience, and one of the reasons I chose multifamily, is that transactions tend to be more win-win than single family. You definitely don’t want to blindly take a brokers pro forma as fact, but when there is a clear value-add, if you’re unwilling to pay at least something for that opportunity, you’re not likely to get any deals in a sellers market like this. Obviously if you’re able to do it, and it sounds like you are, thats fantastic. It sounds like you’ve found some motivated owners, which is a different story. I’ve tried some of that, but even on smaller properties that seem to be mom and pop operations, say 40-80 units, they tend to be sophisticated sellers, and know exactly what their property is worth.
    In looking at 100-200 unit deals, my offers would be thrown straight in the trash if I didn’t offer more than actuals on a property where rents were clearly under market.
    The other thing I wanted to comment on is property management. I think its amazing that you’re able to run all your properties yourself without a management company, but i completely disagree with the analogy of having other people run other types of businesses. One of the huge benefits of MF is that management companies exist, and allow a non-expert to have expert people run a business for them. Now finding a good one is not easy, and its critical. You can’t just put in the PM, then sit back and expect everything to be great. In addition, unless you’re very experienced, a lender is going to require that you hire professional management before they’ll even consider giving you a loan on a sizable property. I was able to squeak through the loan process on a 32 unit as a self manager, but they did require that I have a PM co on retainer for consultation as needed. On the larger properties I’m pursing now, with non-recourse financing, there’s no chance of that. The other thing I would say is that unless you have an absolute passion for property management, which it sounds like you do, its going to be a beating. Its one thing to have a few small properties, but if you want to scale your business its going to be a full time job.
    I am absolutely not saying I’m right and you’re wrong, as you’re clearly very successful at what you do. Just didn’t want someone to hear the podcast and give up on multifamily because they think they have to manage a property themselves. There are lots of ways to make this business work.

    • Brian Murray

      Hi Tom!

      Thank you for the feedback and additional perspectives on some of the subjects we covered in the podcast.

      With regards to paying up front for some of the value add, yes it is a sellers market right now- particularly for larger projects. There are too many institutional investors looking to put money to work right now in multifamily, and not enough projects to go around. In this environment, people are paying premiums and cap rates are near historic lows. And yes, people are paying up front for value add. I just won’t do it myself because of how much it increases risk- just my personal investment criteria, though I can definitely see and respect your point.

      We’ve been trying to get around this by being more creative (thus the hotel conversion we just did, which I mentioned in the podcast.) Also I haven’t found a listed property that fits my investment criteria for awhile. Our last four acquisitions consisted of two off market transactions and two foreclosure auctions (one of which didn’t go well as I mention in podcast.)

      With regards to the management companies, for people just starting out in MF (maybe with a property of 5-30 units) I do believe they can benefit long term from first-hand management experience if their situation allows it. Most banks will be OK with it if they can demonstrate experience with smaller properties (hasn’t been an issue for me since my first property- even with non-recourse.) By self-managing, they can keep tighter control while reinvesting money that would have gone to a third party. I also feel like if they are able to get some first hand experience in property management then they will be better equipped to “manage the management company” long term.

      All that said, it just won’t work for some buyers or in many circumstances and I respect that. My position is primarily that people should choose it with eyes wide open, recognizing the pros and cons. Outsourcing makes life easier and is sometimes absolutely necessary. But in my opinion, whether for convenience or necessity, outsourced property management comes at a price.


  7. Kim Handelman

    Brian, I agree with so many of the positive comments above. I learned a TON listening to your story. Your advice on who makes it with your explanation of “GRIT” and your nod to Angela Lee Duckworth is amazing! My children’s elementary school principal played her TED TALK ( at back to school night and it has been a mantra around our home. Grit can propel you over so many obsticles in life! Truly a brilliant insight that I hope evereone who listens takes seriously.

    Thanks again!

  8. Jeff Heflin

    Truly excellent podcast Brian! Thank you for taking the time to share from your experiences. At this point, my investing has been exclusively in single family. However, I’m trying to learn more about commercial – including multi-family. You mentioned that you’re a reader, which I can completely relate to. Do you have any other real estate book recommendations besides those mentioned in the podcast? Thanks again!

    • Brian Murray

      Hey Jeff!! Thanks for listening- glad you relate. Unfortunately, I’ve been really disappointed with most of the commercial real estate books I’ve read. Most are either targeted at brokers or are a little too focused on technical aspects without enough practical advice. Others focus on larger deals or development projects, which aren’t generally a good fit for people just getting started. So… I’ve read just about every one I can get my hands and have found I can take a few things away from just about any of them. This whole void is actually enough to prompt me to consider writing a book- stay tuned! =)

  9. David Frandsen

    You were a great Podcast guest. I don’t know why you don’t have 500 followers after that.
    I liked hearing about your creative deals. It was very informative. I was especially interested about how you structured your lending. I’m at a point where I will probably need to find some seller financing (either all or a portion) so I liked hearing about your situation.

    • Brian Murray

      Thanks so much David!! I have gotten a lot of positive feedback so that is motivating. I’m a teacher at heart so enjoy sharing what I’ve learned- especially so with commercial properties as I’m tired of hearing other commercial investors talk about it like it’s more complicated than it really is. If you have any questions as you look at deals or structure your lending, feel free to drop me a note. Best of luck as you move forward!!

  10. Jeffrey McKee

    Hey Brian and fellow BP members. Fantastic story that resulted in a checkmate. Your ability to see the chess move that others didn’t is a true skill. I am adopting the added value investing strategy to cultivate a new sense of creative cash flow myself.

    I would like to get additional clarity on how you come up with your starting offer for auction properties. I have had situations where I hit minimum reserve (pure luck) but other investors were just a few dollars over my offer to beat me out. Do you recommend a strategy to hit the reserve and close the deal before someone else has a chance to make a stronger offer? I have lost multiple deals because broker did not get to seller in time. Any one in Dallas, tx recommend a good broker or active investing agent message me!

  11. Jeffrey McKee

    Hey Brian and fellow BP members. Fantastic story that resulted in a checkmate. Your ability to see the chess move that others didn’t is a true skill. I am adopting the added value investing strategy to cultivate a new sense of creative cash flow myself.

    I would like to get additional clarity on how you come up with your starting offer for auction properties. I have had situations where I hit minimum reserve, but other investors were just a few dollars over my offer to beat me out. Do you recommend a strategy to hit the reserve and close the deal before someone else has a chance to make a stronger offer? I have lost multiple deals because broker did not get to seller in time. Any one in Dallas, tx recommend a good broker or active investing agent message me!

    • Brian Murray

      Thank you Jeffrey! I’m glad you enjoyed the podcast- thanks for listening! With regards to your question, I think your strategy needs to be different depending on the type of auction and the terms under which it is conducted. In the podcast I was specifically referencing a foreclosure auction. In this auction the bank sent a representative to the auction and that representative was present for the sole purpose of bidding until the reserve price was met. It was a live auction- literally conducted in a vestibule in front of the local courthouse. So we could basically start at a very low price and bid up in small increments until the bank representative stopped bidding. In situations where the bank’s representative is the final bidder, that would indicate that the reserve was not met and the bank retained ownership of the property. So that pretty much eliminates any guess work on our part. Good luck!

  12. William Newman

    Hi Brian,

    Congratulations on all of your success and for providing us at BP with a great podcast! I look forward to speaking with you soon so that you may provide your expertise on how to duplicate your success in my market.

    There is no such thing as luck, so I am sure that your efforts will continue to pay off. Happy Investing!

  13. Tia Rubadeau

    Great podcast, Brian, so much wonderful information! I’m in the Syracuse area now but grew up in Sackets Harbor and attended IHC so I was thrilled to hear all the positive changes you have made in the area. You have taken Watertown by storm! It’s inspiring to hear such a success story from a local investor. Congratulations on all your success, I look forward to continuing to follow your projects.

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