Short on Cash & Experience? Consider THIS Strategy to Break Into Multifamily Investing

by |

I believe multifamily investing is one of the best real estate strategies to achieve your financial goals because it generates passive income and long-term wealth. You might actually agree with that, but DON’T believe it’s right for you.

Most investors think that because they don’t have the money for a multifamily property, they can’t get started. My normal response to this objection is to raise money from others (and I write extensively about this here on the BiggerPockets). However, there’s an alternative:

Refer the deal to someone else (and get paid for it). 

Related: Are There Still Multifamily Deals Out There (& Should Investors Prepare for a Crash)?

I had a student who brought me a deal in Columbus. He found it, analyzed it, and was getting close to a verbal agreement around a number that made sense. He then called me up, and we determined that the deal was in fact going to work. We agreed on a $45,000 referral fee payable at closing, and I would take over from there.

This would let him say that he did a deal AND he got paid $45K. Experience + getting paid. Very cool.

In an environment where deals are harder to come by, finding and pre-negotiating a deal HAS HUGE VALUE. That’s something you can get paid for.

And it’s not difficult to get started: You have to learn how to find deals and how to analyze them (I’ve written about both of these topics!). You don’t necessarily have to learn about raising money, building a team, performing due diligence, or dealing with property management. You just have to get good at analyzing deals, which is a skill you can learn in a few weeks.


Download Your FREE copy of ‘How to Rent Your House!

Renting your house is a great way to enter the world of real estate investing, but most first-timers (understandably) have a lot of questions. Fortunately, the experts at BiggerPockets have put together a complimentary guide on ‘How to Rent Your House’. All the skills, tools, and confidence you need to successfully rent your house are just a mouse-click away.

Click Here For Your Free Guide to Renting Your House

The Key to Referring Deals to Others

I have people email me like this: “Michael, attached is a 25-unit deal in Orlando. Let me know what you think.”

First of all, answering that question will take some time, and even if I were to answer the question, you have no control over this deal. All you’re doing is sending me an unqualified lead, of which there are hundreds.

Don’t be that guy or gal.

Instead, make it easy for the person you’re referring the deal to. Analyze the deal, figure out the most you can pay, and make an offer. If you either start negotiating around a number that makes sense, you have a verbal agreement on a number that makes sense, or (even better) you have a signed Letter of Intent for a number that makes sense, THEN (and only then) contact your potential buyer or partner with the deal.

Related: How to NOT Sound Like a Multifamily Newbie (& Actually Land Deals!)

Now, that the deal is qualified AND you have some kind of control over the deal. That’s what makes working with you so valuable. You have an “in” with the broker or seller, something no one else has.


Get in the Multifamily Investing Game!

If you’re looking for a way to get into the apartment building investing game, bird-dogging or wholesaling deals might be a great way to go. You just need to get good at analyzing deals. Then refer deals that are properly underwritten and pre-negotiated. This is a skill you can get paid handsomely for, it’s not terribly hard to learn, and it gets you started with multifamily investing.

Is this a strategy you’d use to help break into the multifamily game?

Let me know with a comment!

About Author

Michael Blank

Michael Blank is a leading authority on apartment building investing in the United States. He’s passionate about helping others become financially free in 3-5 years by investing in apartment building deals with a special focus on raising money. Through his investment company, he controls over $30MM in performing multifamily assets all over the United States and has raised over $8MM. In addition to his own investing activities, he’s helped students purchase over 2,000 units valued at over $87MM. He’s the author of the best-selling book Financial Freedom With Real Estate Investing and the host of the popular Apartment Building Investing podcast Apartment Building Investing podcast.


  1. Rob Lehmann

    This is great advice, but I’m missing an important piece of the puzzle here. Let me propose a hypothetical:

    I find a deal and run the numbers, find out that they would work, and want to send that deal to a potential investor. How am I to be sure that he won’t just swipe it out from under my feet without paying a referral? What keeps him from just asking enough questions to find the property and make an offer directly to the seller?

    • Michael Blank

      This is a valid concern but there are ways to protect yourself from this with one or more of these tips:

      1. First, don’t do business with people you don’t trust. This is sometimes hard to do when you first meet someone but oftentimes, peoples’ reputation precedes them.

      2. Get the property under contract. That way, you have full control;

      3. Keep the deal anonymous when you send it to someone else; and/or

      4. Send the person an NDA/Non-circumvent agreement which says they can’t go around you. Once that’s signed, send them more info.

      Hope that helps.

  2. Devin Milliron

    Thank you for your advice. I am new to investing and would like to learn how to analyze a deal. Do you have literature to refer me to? I honestly don’t know anything about investing yet and I feel that my lack in this area will severely decrease my potential for success.

  3. josh wood

    Hi Michael, Thank you for sharing your experience and advice on how to break into multifamily investing when an individual is short on cash and experience. I am a rookie to real estate investing and I have not completed any deals aside from “accidentally” flipping my first home due to relocating for a advancement in my career. My experience has made me excited about the possibility of real estate investing. I began to read more about real estate investing and stumbled across BiggerPockets. I am a Tax Analyst by trade and I believe that skills that I have gained through my education and career would be beneficial when analyzing real estate deals.

    One of your tips for advice that I’ve read suggests that student get the property under contract before passing along the referral. This raised two questions in my head. First, how is a property that is under contract passed along to the future owner/investor? Next, how does the student avoid legal ramifications in the case that they are unable to work out a deal with the investor and the purchase agreement is voided?

    Again, thank you for your sharing your experiences and investing your time with newbies like myself.

    • Michael Blank

      Hi Josh – thanks for your questions!

      > First, how is a property that is under contract passed along to the future owner/investor?
      If it’s under contract, it’s normally passed on with a contract assignment. This is normally about the same as what you use to wholesale a house. It assigns the contract (and all its rights and obligations) to another party.

      > Next, how does the student avoid legal ramifications in the case that they are unable to work out a deal with the investor and the purchase agreement is voided?

      This can be tricky, but remember that you still have a 21-30 due diligence period during which you can terminate the contract for any reason. You have to make sure you assign the contract EARLY on in the process to still give the new buyer time to complete their due diligence. Normally you have a good amount of time (7-14) days between you get verbal agreement on a price and the actual contract is signed.

      Hope that helps!

      • josh wood

        Thank you, I appreciate you taking your time to respond to my questions. I am encouraged by professionals such as yourself who are willing to share their experience and knowledge with newcomers and individuals such as myself who are researching the various opportunities to invest in real estate.

      • In my market, you have 17 calendar days (not business days) for due diligence, and you cannot get out of a contract “for any reason.” You basically have a choice of two reasons IF they are stipulated in the contract. 1. financing falls through, 2. home inspection surprise. I suppose you could argue your financing fell through, but how do you prove it if you never made a loan application in the first place. In fact, how did you get your offer accepted without a pre-qualifying letter or a proof-of-funds?

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here