Commercial Real Estate

How to Scale to Multifamily in 3 Simple Steps (& Why You Shouldn’t Be Scared!)

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New modern apartment building exterior concept. Residential house and home.

The time has come, and you are finally ready. You have spent so much time accumulating houses, but you still do not feel any further ahead than anyone else.

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It has been a rollercoaster ride, good luck and bad luck going hand in hand. The cash flow on a couple of your properties has been great, but you keep getting hit with house payments, taxes, and repairs. A brief stint in jail did not help either, and even being chairman of the board has been costly. But it is all about to pay off!

The Scottie dog just rolled a six, and he owes you big time. You now have enough cash to put that red hotel in the perfect location. The game is not over, but you can feel it.

You have just won!

As a kid, my favorite game was Monopoly. That is probably where my fascination with scaling began. When I first started out in real estate, I assumed that apartment complexes were all owned by big companies based out of L.A. or New York. Once I learned that anyone can own a large multifamily property, I knew that was where I wanted to be. After all, while you can still win the game with a bunch of small houses, it happens a lot quicker with those big red hotels.

Multifamily investing, and even more so large multifamily, is not typically an investment people start out with. Most start by flipping houses, buying single family rentals, wholesaling, or some other niche in real estate. This may be due to the lack of understanding of how multifamily works or simply the complexity of this large of an investment. 

Like most people, I experienced a bunch of different aspects of real estate before making the jump. Looking back, I wish I had done so much sooner—especially since my plunge into multifamily boils down to just three simple steps. 

3 Steps to Getting Started in Multifamily Investing

1. Educate yourself.

I have to admit that, in the beginning, I was intimidated by large multifamily properties. Million-dollar checks, hundreds of tenants, the whole thing can be overwhelming. What got me past that mental roadblock was the amount of time I put into educating myself. 

I listened to numerous podcasts, starting with those more generalized (like the BiggerPockets Podcast) and continuing all the way to uber-specialized ones (like the Old Capital Podcast). I set up Google alerts and read every article I could find. Then, I ordered every book that the article recommended. 

I attended meetups, and I asked as many questions as I could. I wanted to be absolutely sure that this path was the right one for me. And in doing so, I was able to draw a better roadmap as to where I can fit in.

While in many cases jumping in the deep end and taking action is the best way to learn something, I knew I would be putting investor’s money on the line. I wanted to learn everything I could in the classroom before I took it out to the streets.

Related: Tips for Vetting a Multifamily Investment Property

2. Leverage experience.

Over the last year alone, I have amassed a level of knowledge that is unrivaled compared to any other year of my life. What I also learned is that you do not need to be an expert on everything.

When you buy a single family rental, you might end up funding the down payment, finding the perfect loan, managing the renovation, managing the tenants, and doing the repairs all by yourself. However, when the deal gets large enough, there is enough of the pie to go around that you can afford a whole team of people.

Don’t like raising money and managing investor communications? Find a partner who does. Only like finding deals? Partner with someone who will manage the asset. 

apartment-complex

In my experience, it is better to be really great at what you do than to try to be a jack of all trades and master of none. Personally, I have extensive knowledge and experience with project management and construction; thus, I look to partner with others who have complementary skills. 

Having 30 percent of a great deal will always be better than 100 percent of a flop. Leverage your experience, and do not try to be something you are not.

Related: The Ultimate Guide to Multifamily Financing

3. Network.

Finally, in my opinion, the most crucial part of being successful in the multifamily space is networking. As mentioned previously, multifamily investing is a team sport, and networking allows you to build your team or be “drafted” to another team. 

Another benefit to networking is evident in deal sourcing. Unlike single-family, there is no single listing source, like the MLS, for available multifamily properties. The majority of transactions occur “off market.” These transactions are a direct result of the relationships that you have cultivated over months and even years.

As the saying goes, “Your network is your net worth.”

The Bottom Line

Like most new ventures, investing in multifamily in its totality can seem daunting. While I may not have realized it at the time, systematically breaking down my entry into this new career path helped me get to where I am today. 

And although I may not own Boardwalk or Park Place (yet), I am slowly acquiring the right properties, with the right partners, to trade in our green houses for red hotels. 

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Do you have any questions for me about making the jump to multifamily? Or do you need advice that I haven’t provided here?

Let’s talk in the comment section below. 

Ashley Wilson, co-founder of HouseItLook LLC and Bar Down Investments LLC, started investing in real estate in 2010 with a single rental property. HouseItLook, located in the suburbs of Philadelphia, Penn., specializes in flipping early-1900s homes needing full-gut renovations. Bar Down Investments runs construction and asset management on large multifamily projects, while simultaneously offering investors opportunities to invest in real estate passively. Today, Ashley has overseen over $3 million in construction and completed over $36 million in transactions, including both single and multifamily real estate. Ashley has been featured on numerous podcasts, including episode 277 of the BiggerPockets Podcast, and was a contributor to BiggerPockets' Facebook Live.

    Ali Hashemi Investor from Southern Indiana, IN
    Replied 3 months ago
    I got very excited when I saw the title, but I missed the part where you discussed scaling. Great article, but it should have been titled “why not to be scared by Multifamily”
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 3 months ago
    Sorry that was misleading, unfortunately, I don't pick the titles. Hope you were still able to get some helpful information.
    Mi Rez
    Replied 3 months ago
    Ashely, I concur with all you said but living in Northern California does not make it easy. The prices of multi families are sky rises and finding a good deal is relatively impossible. I’m thinking of investing in AZ, TX, FL and Vegas. However, I’m scared of going out of state for investment and later losing the control of my multi family. What do you suggest? Out of state or purchase $500k per unit!!!?
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 3 months ago
    I personally invest in multifamily out-of-state. While you can research other markets, if you do not feel comfortable doing that, you could always partner with someone who is already familiar with the markets you are interested in investing.
    Justin Sullivan Flipper/Rehabber from Williamstown, NJ
    Replied 3 months ago
    It was titled "How to scale "to" multifamily in 3 simple steps (and why you shouldn't be scared) So it actually was titled why not to be scared. I don't understand your comment. Maybe you should read the article again and take the advice in it because I found it to be very informative. Educate yourself, figure out your strengths and utilize them in this field, I especially liked how Ashley said "there is plenty of money to go around" in multifamily and you basically need to work with a team and not solo. Lastly I appreciate her informing us on networking to find multifamily deals because majority are off market. I plan to get into the multifamily space within the next year or so. I will definitely continue networking and setting up my team until I finally break into multifamily. Thank you for your article it was great! Keep them coming!
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 3 months ago
    Thank you!
    Danielle Fukes
    Replied 3 months ago
    Hello Ashley, it’s truly amazing how this morning I was looking for Multifamily properties. Here I came across your article. I’m interested in becoming an investor and was wondering if you would be my mentor? Article was amazing . Thank you. Danielle
    Ashley Wilson Rental Property Investor from Radnor, PA
    Replied 3 months ago
    Thank you Danielle. Feel free to message me offline.
    Oleksandr Ivanovskiy Rental Property Investor
    Replied 3 months ago
    This is great inside you shared on Multifamily. I just started in real estate investment. I would like to do multi family, but don’t know where to begin.
    Long Nguyen Rental Property Investor from fresno
    Replied 3 months ago
    Hi. I bought my first house in 2012 and my second one in late 2018. Im interested in multifamily now, so Im trying to learn as much as I can about it before i pull the trigger. Thank you very much for sharing this article!
    Chris Connery Rental Property Investor from Cherry Hill, NJ
    Replied 3 months ago
    I do not understand why multi family is the only commercial investment strategy pitched on BP
    Dave Rav from Summerville, SC
    Replied 3 months ago
    Great article. Eye opening.
    Steven L.
    Replied 3 months ago
    Ashley, do you have specific articles or books you recommend?
    Joseph Wise from Chester County, Pa
    Replied 2 months ago
    Thx for your article suggestions. I also would like mentoring amd look for to your knowledge based decisions. As a novice investor. I'm a sponge with unlimited energy amd welome guidence. Thx.JW