Just reached over $100,000,000 in apt communities: Lesson Learned

27 Replies

Wanted to share a lesson learned from the last deal I closed on, a 200 unit, in Dallas. That puts my company at over $100,000,000 assets under management (1,438 units).

Before I do, if you want to check out the lessons learned on my other deals here ya go:

https://www.biggerpockets.com/forums/223/topics/369032-closed-on-a-200-unit-one-simple-lesson

https://www.biggerpockets.com/forums/223/topics/217842-closed-on-250-apartments-in-houston-texas-yesterday-2-lessons-learned

https://www.biggerpockets.com/forums/223/topics/294621-closed-on-155-units-in-houston-yesterday-3-lessons-learne

https://www.biggerpockets.com/forums/223/topics/316836-closed-on-320-unit-last-week-6-ways-to-break-into-the-biz

https://www.biggerpockets.com/forums/223/topics/359926-investor-analysis-after-closing-on-a-296-unit-2-lessons-learned

Ok, back to this deal. I realized that there’s a way to communicate with investors about deals that really resonates. And, I boiled it down so I could use it on my stuff moving forward and others can use it on their deals when they are raising private money.

Ok, here we go.

What’s your favorite biz book? 

Mine is Crucial Conversations. The book talks about how to navigate conversations when opinions vary and the stakes are high. The main solution they discuss is to come up with a mutual purpose then build up from there.

What about your favorite book? What is the central theme? After looking at my bookshelf I realized that most of my favorite non-fiction books have one or, at most, three central themes. Then, the author uses the rest of the book to simply elaborate or add additional context to those themes.

Some examples…

Four Hour Work Week by Tim Ferriss: optimize your time by creating a system for things that you currently do manually

Investing for Dummies by Eric Tyson: Stocks, start-ups and real estate are the three main ways to invest. Pick which path you want to go.

Blink by Malcolm Gladwell: you can make informed decisions in a blink of an eye because of what Gladwell calls “thin-slicing”

So, what does this mean for us as real estate investors? It means that if we can boil down our main talking points into central themes then we can communicate more effectively and get more transactions closed.

Here’s how it just played out on the last deal I closed, the 200 unit in Dallas.

I’ve identified three themes to talk about ANY deal. They are:

1.Market

2.Team

3.Deal

Then, I focus on the top 1 – 2 selling points for each of those categories. For example, on the last deal it was:

Market:

  • DFW is home to 25 Fortune 500 headquarters and has been a top job growth market in the country for years

Team:

  • My company currently controls over $70,000,000 in apt communities in Dallas

Deal:

  • Off-market deal buying at 26% below sales comps
  • Projecting same rent premiums on upgraded units that current owner is achieving

Super simple. But it works. Probably because it’s super simple.

By organizing your conversation talking points to investors into these three themes it addresses all the relevant aspects of the deal. Sure, you’re going to need to elaborate on each of them but at least you’re making sure you’re covering all your bases and leading with the most important selling points on the deal.

This strategy helped me close on this past deal and I’ll continue to use it moving forward. Hope you get a lot of value from using it as well! 

@Joe Fairless - Congrats on the AMAZING accomplishment!  You have provided a valuable lesson for everyone hoping to be in your shoes someday

Hey Joe,

How many people do you have working at your company now to each the 100 million portfolio goal?

It seems at certain points you have to bring on more and more people as you grow to keep up.

I was just curious. 

@Joel Owens it depends on how that's quantified because if you calculate the # of property managers, maintenance people, etc it's a lot. If you count just the people putting the deals together, asset mgmt, underwriting, and doing investor communication it's only about 4 - 5. 

Congratulations on the incredible accomplishment! I love the three main themes you laid out above. Like you said, it sounds super simple, but it makes total sense that it's been an effective pitch strategy because you can pack a ton of information into those three straightforward categories. Best of luck with whatever your next goal may be!

Joe - Terrific job! You are well on your way to reaching your goal of $1B in real estate before 40!

Do you happen to have a link to where you talk about your first deal (or first several)? I'd love to learn about how you got your start!

@Paul F. , @Drew Lamb , @Ryan Mainwaring   - thanks a lot. Yes, the main quantifiable goal is control $1B before I'm 40 (I'm 34 years old now) but I believe my motto I've adopted from Tony Robbins which is The Secret to Living is Giving, is what is the driving force behind the growth. 

@Rob McGahen   I did some singles and one one apt community before. 

@Rob McGahen feel free to message me and I'll send you a link to where I was interviewed about my first deal and how I got started. I posted it in the above post but it got removed so guess I couldn't do that on this forum. 

Congrats @Joe Fairless ! And as someone who was on the receiving end of that information I can definitely vouch for the presentation being one of the most comprehensive yet accessible deal packets I've ever seen. Not only was I able to digest the key points quickly and easily but I was able to present that information to less experienced investors so they could also understand easily. Well done!

I think that in my current market its difficult to find units that have an excess of availability as similar to yours. Right now i'm currently investing, primarily into multiplex properties. Its hard to fathom millions haha. At least in the nature of which you have achieved. Very inspiring and I hope to see the returns you have made as well.

Also, how many property managers are you currently handling? 

I am curious @Joe Fairless to see how your story started! I am currently 24 years old and i am going to school to be a locomotive engineer, my starting salary when the time comes will probably be around 70 to 100k a year and my goal is to just save and save for a few years even if it means living in a studio and eating ramen noodles haha but if im being realistic i hope to reach financial freedom by age 35! 

@Micki M. thank you and hope your world travels are going well!

@Jamison Colston we have two property mgmt companies we work with and each property has one lead property manager. 6 properties.

@Andrew McIntyre   being on BP certainly is a great start. You can send me a message and I'll give you some resources to check out my story and how I got started. 

@Rob McCarthy   thanks a lot

@Andrew McIntyre you should reach out to @Jerry W. He is not too far from you. I know he's busy now but things will slow down eventually. He knows the area you are in and you can learn a lot from him. You will be making great money and with the local downturn you might be able to start sooner than you think. You might be able to live in the studio and eat ramen with someone else paying the rent on the property you own.

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