I recently had the opportunity to join Mr. Joshua Dorkin and Mr. Braaaaaandooooooooon Tuuuuuuuuuurneeeeeeeeer (and the crowd goes wild!!!) for a BiggerPockets Podcast 61.\u00a0 This was, indeed, an honor for me.\u00a0 Guess who was the first ever guest to return for a second show?\u00a0 Tada\u2026yours truly; the one and only Ben Leybovich.\u00a0 Drum roll\u2026taking a bow, with a look of proud satisfaction on thy face!<\/p>\n
Right out of the gate, the first topic of discussion was \u2013 Why Do People Buy Multi-family?<\/i> I think that everyone at the \u201cvirtual coffee table\u201d agreed that the most basic premise behind income-producing assets such as multi-family is indeed INCOME<\/i>.\u00a0 In this article, though, I\u2019d like to put a human face to this concept \u2013 people I know\u00a0truly are benefitting in their lives from the income resulting from multi-families\u2026<\/p>\nTRIP TO CINCINNATI<\/h2>\n
About 4 years ago I took an impromptu trip to Cincinnati \u2013 about a 2 hour drive.\u00a0 The occasion was that one of guys I went to conservatory with came into town for a day to audition for an opening in the Cincinnati Symphony Orchestra.\u00a0 I hadn\u2019t seen him in about four years and thought that we would have fun catching up\u2026<\/p>\n
Well \u2013 about ten or twelve of us ended up getting together.\u00a0 It was great to see all of these people I went to school with. We went to a local watering hole \u2013 haha, I\u2019ve always wanted to say watering hole<\/i>.\u00a0 Actually it was a nice restaurant where we were seated at a big long table, and we talked, and talked, and talked\u2026<\/p>\n
Most people talked about music, their careers (or lack thereof), musical instruments, jobs, auditions, etc.\u00a0 But, I did not get to talk about those things.\u00a0 You see \u2013 I happened to sit across from a\u00a0gentleman\u00a0who graduated one year after me (I think) \u2013 let\u2019s call him Max.\u00a0 This dude couldn\u2019t shut up about real estate; I mean he kept going on, and on, and on. \u00a0He literally sat directly across the table from me and completely monopolized me for the entire 3 hours at the restaurant.\u00a0 I actually felt bad; one of my professors from college was there, and neither her nor any of the other classmates got any attention from me.\u00a0 Truth be known \u2013 I\u2019d rather talk RE than how to get a job in an orchestra that\u2019s going to go on strike every 3 years any time of day.\u00a0 But, I truly did feel bad about basically ignoring everyone else; including the guy I came to see in the first place\u2026<\/p>\n
Turns out that while Max and I hadn\u2019t exactly keep in touch once I left school, he did in fact keep tabs on me through the proverbial grape-vine, and knew that I had been buying property.\u00a0 He, as most of us, had read Rich Dad, Poor Dad, and was admittedly utterly fascinated with the topic.\u00a0 He wanted to get in the game, but didn\u2019t know where to begin\u2026<\/p>\n
There is an old Russian proverb which doesn\u2019t translate well but kinda goes like this:<\/p>\n
You hear bells, but you don\u2019t know where they are or how to look for them\u2026<\/i><\/p>\n
Has this happened to you yet?\u00a0 Have you ever experienced sensing that an opportunity exists but not having perspective on what it is or how to capitalize?\u00a0 That was me at one point as it related to investment property, and this was Max.\u00a0 He was so close, and yet so far away\u2026<\/p>\n
It took 2 years worth of long telephone conversations.\u00a0 Perspective takes time!\u00a0 But, then it happened \u2013 I received an email with a spread-sheet attached.\u00a0 It looked good.\u00a0 This was a brick 4-plex within a 5-minute drive from his house \u2013 he was comfortable with the location.<\/p>\n
He ended up buying that building!\u00a0 And this is where we get to discuss the question of why people buy multi-family\u2026<\/p>\n
Max and I talk on the phone a lot \u2013 not as much as Brandon Turner and I, or Serge Shukhat and I, but that\u2019s only because for now Max actually has a job; otherwise he\u2019d be talking RE as much as we do \ud83d\ude42\u00a0 Well \u2013 he called me about a year following this acquisition and literally said the following:<\/p>\n
\u201cBen \u2013 the only reason I can afford child-care services for my baby is because of the Cash Flow from the 4-plex I bought a year ago.\u201d<\/i><\/p>\n
Yep \u2013 Max and his wife were expecting their first-born at the time of this acquisition \u2013 a beautiful little girl named Maxene\u00a0\ud83d\ude42\u00a0 The plan was to use the plus or minus $700\/month of cash flow to help pay for child care, and it worked out rather well.\u00a0 It hasn\u2019t all been smooth \u2013 managing tenants never is, but by and large IT WORKED!<\/p>\n
How\u2019s that for why people buy multi-family?!<\/p>\n