Over My Head - Apartment Complex

7 Replies

Hello BP community
I am in a situation that I am looking for some advice on.

A little background to start: I bought my first investment property 3 years ago. I currently hold 2 cash flowing duplexes. I am looking to scale the business in some way leveraging OPM. So I began my search for Private Money. In hopes of getting a hard money lender, or some private equity investors to trust me with a few dollars..

I recently approached an experienced RE investor (friend of a friend) asking for some guidance. He has been quite helpful with some minor issues. A few brief conversations, mostly giving some choice words of encouragement. Which surprisingly made a world of difference coming from someone who has been investing for as long as I’ve been alive. I brought up the idea of working together in some fashion. And I got a long period of silence. He replied “Find me an apartment complex”

I’ve been set to a task that is largely beyond my realm of understanding. Having dealt with small dice so far; 2-family homes seem vastly different from a 40-plex. I know that MLS is easy for anyone to browse smaller residential. I understand the concept of how to pursue Off-market deals: Driving for dollars, yellow letters etc. But how does that translate into Large scale multis? Is loop.net similar to the MLS where deals are hard to come by?
Is there such a thing as driving for dollars in the apartment complex world?
Do I start calling a random building’s property management, asking to talk to the owner?

I’m asking the wonderful folk on BP because my “mentor” is very tight lipped. He didn’t give me any details on what he’s looking for. It feels like a test. “Show me that you are worth my time/money.”

Now I’m frozen. I’ve got this opportunity in front of me and I don’t know what to do with it.
Any advice would be much appreciated.
Thank you all in advance!

The was never meant to be easy game. Now you have to weigh over-55, student, subsidized, HUD financed, and quite a few variables that make the over-30 unit multi much more complicated. You should really start the path of educating and possibly being mentored.

I made the transition from triplexes to big multi-unit apartment buildings. It really was not that difficult. You need to build relationships with brokers who deal with those kind of properties. You also need a good real estate attorney that will dot the i's and cross the t's for you. The rest is just the same but on a bigger scale. I have to say that transiting to bigger properties actually made my life easier. The buildings I owned had live-in managers who dealt with all the day to day stuff. Don't be intimidated by the numbers.

@John Alosio see if you can sort the dross from the otenti gold on public forums and bring him a few things you think could be decent, not necessarily home run deals. I’d ask him for price range, level of rehab he’s capable or interested in doing, preferred market segment etc.

Can u identify opportunities for added value? Can you identify drivers of growth? Can you read a pro-forma and figure out what percentage is fiction? Can u identify risks appropriately? Can you get a sense of where the fair deals fall in the market?

Your task isn’t to find him the deal of a century, it’s to prove you are a worthy partner and not a gullible idiot.

Originally posted by @Mark H. Porter :

The was never meant to be easy game. Now you have to weigh over-55, student, subsidized, HUD financed, and quite a few variables that make the over-30 unit multi much more complicated. You should really start the path of educating and possibly being mentored.

 Do you know of a mentor that could show the ropes or multi family.?

Thank you all for the advice. I've been listening to the BP podcast religiously for the past few months and I'm kicking myself for glossing over the segments about complexes. I figured I'm not there yet, no need to waste my brain space on this information. I recall only bits and pieces of relevant info.
Well I'm there now. I can do this. I can try at least. Probably do it poorly. But it's worth a shot.
thanks again for your support :)

I'm a little behind you. I have a few SFR's, one duplex, and looking to go bigger. I actually did find a 10-unit by driving past it, and while I'm starting to think it's not a good deal, it kickstarted me into learning about apartments.

What I can say is that every time I've been "tossed into the deep end" so to speak, thrown into situations I thought were beyond me, I at least learned a lot. Some of those were situations in the military, when I didn't think I was ready to take on a task. Hell, my first true investment property happened because I mentioned some interest in REI to my mom(who is a Realtor), and next thing I know I have agents calling me saying she referred me. I get into situations like that, and I hate so much being seen as wasting someone else's time, hate so much being seen as giving up, hate reflecting poorly on people that vouch for me, that I just put nose to grindstone and find a way. I fail sometimes, of course, but I always come out the other side better in some way.

Remember, people have done this before, and people are going to figure it out tomorrow, and you're a person just like them.