My Very Best Real Estate Deal May Not Be What You’d Expect

My Very Best Real Estate Deal May Not Be What You’d Expect

3 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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What has been my best real estate deal so far? The deal I didn’t do.

This isn’t a story of the big fish that got away. I’m sure we all have some of those. For me, the best deal or real estate decision I’ve made was choosing to walk away from a large multifamily investment.

The One I Passed On

I walked away from this big 118-unit apartment complex.

At first it looked like a viable deal. It looked like the numbers could work, financing was a possibility, and there was room to push more value in it with some renovations, smart management, and new tenants.

We ran numbers, negotiated with the seller, and got our teams busy on it. Then we walked away.

Why? Well after really digging into the property, we figured out we’d need new roofs on all the buildings. That wasn’t in our budget. We could have tried to pull it off anyway, but we wouldn’t have been where we wanted to be financially. It wasn’t easy to let it go at that stage. But looking back, it was the best move — and probably one of the best decisions I’ve made in real estate so far (besides transitioning from single-family investing to multi-family).

Related: These Are the Real Estate Deals You Should Absolutely Avoid

Lessons Learned

I learned a lot in this process. Maybe some of these things will help you in your investing too.

1. Listen to the Seller

The seller had alluded to there being some roof issues, just not at that scale. When a seller mentions a potential repair, expect it to be worse than that. “Just needs new flooring” could mean you can see the ground through the floor. “Could use some updating” might mean it needs rewiring and re-plumbing throughout.

2. Get Financing Set Early

One of the smart things we did was to get with our lenders early. They sent out their own engineer and appraiser in a timely manner. Any questionable items they find during inspection are things you want to know upfront, not a day before closing.

3. Be Ready to Look at a Lot of Deals

Depending on your area, criteria, and types of product you are looking at, you may have to look at a LOT of them. Even if you aren’t that picky, you might look at a dozen before inking a contract. If you are looking for great profit margins and value, you might look at 100 on paper, run deeper numbers on 10, and sign one or two deals.

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4. Get Contractor Quotes Early

The earlier you can get actual contractors out to inspect the property and provide quotes, the better. Those are much more reliable numbers than your rough estimates.

5. Have a Due Diligence Team

My due diligence team has saved me from making a lot of money mistakes. Have a numbers guy to run the deal and check your math. Have someone to check out the neighborhood, review local market data, and check the rental pool.

Related: The Worst Real Estate Deal I’ve Ever Done (And How You Can Avoid the Same Mess)

6. Be OK With Losing Money

If you are in real estate long enough and are active enough, you will lose money. You will burn money and time on due diligence, deposits, and other minor issues. That’s fine as long as you are making more than you are losing. You can’t get hung up on it. You’ve got to be able to stay objective and just keep going. We ultimately burned somewhere around $5,000 to $7,000 on this deal we didn’t do. We could have lost a lot more if we’d followed through. Don’t keep going just because you already spent or invested something.

After it was all said and done, we got some education and saved ourselves a big mess. We stuck to our numbers and remained objective. That’s what makes the difference in the long run, in my experience.

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What have been your best deals?

What were the best ones you let get away? Biggest lessons learned? Share below!

This isn’t a story of the big fish that got away. I’m sure we all have some of those. For me, the best deal or real estate decision I’ve made was choosing to walk away from a large multifamily investment. Here's why.