CLOSED on a 98-unit TODAY!

248 Replies

Originally posted by @Adam Mauck :

Hi Sam,

I agree completely! If you would have told me to start buying in that area 10 years ago, I would have just blown off the suggestion.  That's what makes Real Estate such an incredible career!  I have become better at speculating the longer I'm in the business, but it's still a roller coaster.  I had a friend start buying in that area about 6 years ago and he had no idea what he was getting.  I say, "buy it if it feels right."

Adam Mauck

There is totally something to be said for "buy it if it feels right". I went to college in Cincinnati. I am used to the urban feel. Every time I am on-sight, I feel at home - I know there are people who will want what I've got, and I know who they are.

I don't really care how good the numbers look. If I don't feel it - I don't buy it, period! 

Originally posted by @Rhonda Wilson :

@Sam Grooms Thank you for sharing some of high-level details from the IREM report. I agree that it would be unfair to IREM to share substantial details of what it included in their report. 

How do you inform people about offerings? We are still doing our own deals, but we're not as young as we used to be. We've thought a lot about our "exit" strategy, meaning that we would like to move more towards passive investing. Do you keep a mailing list of contacts? 

Am I correct in assuming that your deals are not structured for 1031 exchanges? 

That's correct, we aren't structured for incoming 1031 exchanges. On the exit, we'll have a vote of all investors, and if at least 50% of them want to 1031 exchange into a new property, those investors will have that opportunity. 

It sounds like you may be starting a similar transition that Brandon Turner is doing, with going passive. 

On this deal, yes, we reached out to investors that we knew were interested directly. However, we just opened up a new investor portal, where we'll put future deals, and then the portal will email them a notification that there's a new deal. The portal is fairly sophisticated. We used it for the subscription process on this deal, meaning we had all of the documents in there and everything was signed directly within it. Investors will be able to see monthly financials, quarterly updates, and their K-1's directly in the portal. It'll also give them real time performance metrics on their investments, like cash on cash, ROI, IRR, etc.

Originally posted by @Andrew Bosworth :

@Ben Leybovich & @Sam Grooms

Congrats on the deal!  Great area of town.

For underwriting purposes, did you develop your own calculator or buy something "off the shelf"?  I'd be curious to know what your go-to tool is.

Thanks, Andrew.

Definitely nothing off the shelf. I've seen 3 of the more popular calculators out there, and I'm not a fan of any of them.We each developed our own underwriting model. We underwrite each property separately and then compare. 

My problem with the packaged calculators is most people using them don't have a complete understanding of what's happening in them. You need to understand each formula and all of the logic that goes into it, to be able to make a decision based on the output. You need to understand its limitations, and how to adjust it (the model, not the inputs) for each deal. At that point, why would you need someone else's calculator? 

Originally posted by @Andrew Bosworth :

@Ben Leybovich & @Sam Grooms

Congrats on the deal!  Great area of town.

For underwriting purposes, did you develop your own calculator or buy something "off the shelf"?  I'd be curious to know what your go-to tool is.

I'll take @Sam Grooms 's comment even further. The real issue is not that people don't understand what's happening in the calculators, they don't understand the dynamics of what's happening with the asset! 

I've written so many articles on the BP blog over the years addressing this very issue. Most people see the property/opportunity through the focal point that is the calculator. This is backward - we see the property first, and then boil the dynamics down to the inputs. 

The calculator is only as good as the inputs you provide, and no one teaches those inputs (except for me, of course). The calculator, then, should be a reflection of one's ability to internalize the dynamics within the investment. The more one can "see", the more precise the inputs become, the more inputs it takes...

So - the reason there will never be one size fits all is not because all property is different - it's because all investors are different. We see things differently. We allocate importance to different elements. Etc.

Makes sense?

I'll second the complete guide to buying and selling apartments.

Originally posted by @Sam Grooms :
Originally posted by @Matthew Cain:

@Ben Leybovich That is awesome! I'm from Phoenix area and love the market. What books or resources would you recommend for newbies who are interested in investing in multi-family?

Matt, Ben mentioned Dave Lindah's book, Multifamily Millions, but there are some other good ones, too. 

I really like The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges. Not a lot of fluff, just a lot of teaching. 

Then there's The ABCs of Real Estate Investing by Ken McElroy. 

Those three books will introduce you to a lot of the basics of multifamily investment. 

Originally posted by @Jeffrey Holst :

Also congrats to both of you.  10mm is a big deal for sure.  Hope you hit your 15mm exit position.

Thanks, Jeff. And we'll hit it, the only question is when...and even that's not too much of a secret. If the Cap Rates hold - in 3 years. If Cap Rates inflate, then longer. The rest is an automatic process...

Congrats to you guys. In a market like we’re in this sure sounds like a real nice deal. Best of luck to you in the implementation of the business plan.

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