Personal Development

7 Steps Toward Next-Level Real Estate Acquisitions (I’ve Reached $40MM So Far!)

Expertise: Mortgages & Creative Financing, Personal Development, Landlording & Rental Properties, Personal Finance, Real Estate News & Commentary, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Business Management, Commercial Real Estate
169 Articles Written
man with blue geans and sneaker shoes in stair

It’s 5:30 a.m. The kids are still asleep, and so is Patrisha.

I am sitting in the backyard at my Arizona house hack, enjoying the reflection of the blue skies in my sparkling pool.

It’s quiet. It’s blissful. And being that it’s the day after the Fourth of July, I am thinking about the sacrifices so many have made to protect my freedom.

So, before I go any further, a big thank you to all of the veterans out there!

Now, back to the purpose of this writing.

How You Can Amass $40MM of Real Estate

In the last 10 months, my company and I have closed $40 million worth of apartment acquisitions. We bought three apartment communities in Phoenix, and we are on the lookout for many more.

Per our business plan, we strictly buy significant value-add assets, whereby we can project a $300 per unit increase in revenue within 24 months. If I am right about the re-positioned net operating income (NOI), the value of the three assets we currently own should capitalize to about $65 million when we are finished with repositioning.

Here’s the thing. Unless you are independently wealthy and have $15MM just laying around, in order to be able to buy $40MM of real estate as we did, you will need to syndicate equity from partners.

Therefore, in describing the steps to get there, what we are really talking about is what it would take for you to be able to mature as an investor to the point of syndicating large assets.

Here we go.

Young Asian businesswoman frowning with concern as she tries to understand something she is reading on her laptop computer scratching her head with her pencil in perplexity

Step 1: Study

You have to study. To get to this level, you have to become an intellectual.

Even if your first purchase is a rental house or a duplex, try to understand the process on the deepest level you can. You must be able to see yourself in your mind’s eye as a person with $40 million of assets before you can actually be that person.

Study is a critical component to give you the confidence to envision yourself larger than you currently are. Your intellectual worth has to always supersede your net worth.

Step 2: Experience

I’ve said this many times before. Underwriting numbers is nothing more than a process of describing the dynamics in a lifecycle of an investment. As such, we don’t start with the numbers; we back into them.

Your job is to start with the dynamics (the “story”) and boil them down to the numbers. The more you can envision and predict the dynamics, the more accurately you’ll be able to express those with numbers.

Guess what? You can’t internalize the story from a book. You have to experience it.

Thus, start small, get smarter with every deal, and build upward. The more you can envision every little aspect of that story, the more dialed in your underwriting becomes.

Related: To Syndicate or Not – This is The Question (What Would You Do?)

Step 3: Network

You just don’t know when and how a door will open. Be available to people. Connect with people.

But be careful who you listen to…

Step 4: Teach

You don’t start learning until you begin to teach others! The reason for this is simple. A lot of what we do is subconscious.

This is specifically the case for those of you who are truly talented, as talent can hide a lot of analytical deficiencies. This means that, in a lot of cases, we are not aware of the exact intellectual processes underpinning our decision-making and execution—they are intuitive. Things just work out.

Well, you may be brilliant at doing something, but in order to teach it in a way that a student can internalize, you have to break the process down and bring it into the consciousness. This is the only way someone who is not you can retrace your steps.

Bringing that which would otherwise be accomplished subconsciously into consciousness illuminates all kinds of elements and dynamics that the teacher themself may have been unaware of. It’s actually a really cool process for the teacher—one that provides perspective on how to hone your skills even more.

This is why I’ve always taught. Every time I learned something new, I taught.

At first, I taught students to play the violin. Then I taught students how to buy small multifamily with nothing down. Now I teach syndication.

And somewhere in there, I managed to write a book on house hacking.

Step 5: Learn More and Learn Differently

Once you begin to teach, you start to learn all over again. This is where your knowledge transitions from mechanics (a lot of which may have been unconsciously executed by you in the past) to academia. You need to think deeper to grow!

But…

Step 6: Eventually You’ll Hit a Wall—Recognize It!

Now that you really are a thinker—one who will continually learn, refine, and implement—I can guarantee that you will eventually hit a wall. At this point in your cycle, you’ll more than likely be the smartest guy in the room. You’ll know the answers to all of the questions anyone can ask.

And yet, you’ll know that something is really off with you. Despite having achieved all of those things, something is missing. You won’t be able to put your finger on it, but you’ll know that something is wrong.

I describe this condition in the following way:

Imagine yourself standing in a cornfield. The corn is tall and you can barely see above it. It’s dusk. All of a sudden you hear church bells. You strain your eyes, spinning 360 degrees looking for the church, but you can’t see it. It’s infuriating—you can clearly hear the bells. You know the church is near, but you can’t see it…

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It is this feeling of so close and yet so far away that I describe as hitting a wall. And believe me, if you are as smart as you think you are, you will eventually hit that wall…

This is going to be your greatest test!

Related: 5 Ways to Jump Up to Large-Scale Multifamily Investing

Step 7: Forget Everything You Knew and Learn the New Way

I know this sounds a bit on the liberal arts side, but such is life.

Figuratively speaking, the cup that you were yesterday is overfull. There is no more room for anymore knowledge—at least not such as you’ve always known it.

So, this is the time to empty out the cup and fill it with something new. You must be reborn as an investor and as a thinker to move forward. You have to question and reimagine everything.

It’s a painful process. You will eventually accept that almost everything you know is wrong, but you will not know a better way.

This is indeed painful, but in order to be the big investor you want to be, you’ll have to go through this. Then when it’s your time, you will find your path and be ready to operate on another dimension.

The Bottom Line

This cycle will repeat more than once in your career. Every time you hit that wall, you’ll have a choice: either take the off-ramp and call it a day or forget everything you knew and start over.

Each time that wall will be thicker and taller. And each time the process of reimagining everything will be more brutal.

At some point, you’ll be done—with all of it—having accomplished everything you are meant to. Until then, this is the life of a thinker.

Good luck to all!

What do you think about the steps I’ve outlined above? Where are you in the cycle? 

Let’s talk in the comment section below.

 

Ben has been investing in multifamily residential real estate for over a decade. An expert in creative financing, he has been a guest on numerous real estate-related podcasts, including the BiggerPockets Podcast. He was also featured on the cover of REI Wealth Monthly and is a public speaker at events across the country. Most recently, he invested $20 million along with a partner into 215 units spread over two apartment communities in Phoenix. Ben is the creator of Cash Flow Freedom University and the author of House Hacking. Learn more about him at JustAskBenWhy.com.

    Myriam Mourani
    Replied 13 days ago
    Thank you for the great article. I think you’re speaking directly to me….:-) I’m at the point where, owning over a dozen rental properties, I think I need to get to that next level, but I’m scared to get past my comfort zone.
    Derek Sperzel Rental Property Investor from Charlestown, IN
    Replied 13 days ago
    Ben, thanks for sharing, I found this very insightful, and could see myself on this journey.
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 13 days ago
    Myriam and Derek, glad you enjoyed this piece. Thank you!
    Michael Ketchen Rental Property Investor from Pelham, NH
    Replied 11 days ago
    Ben, Thank you again for another excellent article! This is exactly where my team and I are at now! We have successfully repositioned multiple smaller multi family (13-20 ) unit buildings and now I am trying to scale. It feels daunting at times! Thank you for being a great resource and allowing others to see this is normal to go through.
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 11 days ago
    It’s my pleasure to help, Michael!
    Martin Carstens Investor from Edmonds, Washington
    Replied 12 days ago
    Ben, I always look forward to your articles. Just like Miriam, you are talking to me. A dozen rental homes, and what to do next? “The brick wall” And I am ready for the taller, thicker wall! A good problem to have!
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 11 days ago
    Thanks so much for reading, Martin. I used to get a kick out of getting a rise out of newbies. I mean, I always try to make it educational, but I’d pick more accessible topics. So, I’d get 150 comments, most of them disagreeing with me lol That was fun 🙂 This is fun now. Only a few comments, but from people like you, capable of thinking deeper. I love it! And I am grateful for the opportunity to help.
    Redie Armon Jr from San Diego, CA
    Replied 11 days ago
    Thanks for this info, my business partner and I are in the process of diving into our first multifamily deal and we are learning a lot from the mentoring we have been receiving. We are in the process of preparing for a big networking event coming up in a week where their will be over a thousand of deep pocket investors looking to partner up on real estate deals for investors. So we are excited about this networking event. To Everyone’s success on this forum who is looking to step into big property asset investment deals like multifamily apartments. G-d Bless, Redie
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 11 days ago
    Thanks for reading, Redie!
    Bill Davis Rental Property Investor from Las Vegas, NV
    Replied 11 days ago
    Great article Ben! I remember your transition to AZ. I am very impressed with your results and the hurdles you’ve overcome in this transition. Congratulations!
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 11 days ago
    Bill, if you remember my transition to AZ, you’ve been reading my articles for at least 3 years. Thank you!
    Jiffin Eapen varghese Rental Property Investor from New York, NY
    Replied 11 days ago
    Thanks a lot Ben. Really an eye opener.
    Ben Leybovich Rental Property Investor from Lima/Chandler, Ohio/Arizona
    Replied 11 days ago
    Thank you for reading, Jiffin!
    Blake Elder Professional from Wasilla, Alaska
    Replied 10 days ago
    This is super helpful! Like so many above, I feel like this is exactly where I am. I want to get to the next level right now. My wife and I own 16 units and we are doing our first development deal currently. Doing a house hack while also subdividing 40 acres & putting in a subdivision. I am unsure if I should sell all my properties and roll them in to bigger ones, or just add bigger ones to the portfolio etc. I am going on the hunt for more information on this! We have 2 4plexes, 1 6 Plex and 1 single family home that are our rentals. Anyone else have a similar scenario? What did you do to break to the next level? Thanks!
    Nir Wittenberg Investor from Highlands Ranch, Colorado
    Replied 5 days ago
    Thank you
    Dave Rav from Summerville, SC
    Replied 3 days ago
    I love this! Do you have a history in academia? The way your post is written suggests such. Very cool! Great breakdown of the concepts and the topic of learning. Having gone through grad school, I recognize the process of learning you describe. And this quote rocks: "Your intellectual worth has to always supersede your net worth." -Love it!
    John Cantrell Investor from Charlotte, North Carolina
    Replied 2 days ago
    im at 40 units. all single fam buy and hold. trying to figure out my next progression.. multi fam..keep on keepin on...working on my finding deal systems..not fully refined..