I quit my CPA Job to buy Large Apartment Buildings
I have always been fascinated with real estate.
I started in 2000 investing in a couple rental houses.
My "AHA" moment came in 2008 to move away from the single rentals and graduate up to large apartment complexes.
My background is a CPA with real estate taxation and forensic accounting experience. I got to see wealth creation happen with real estate as I would advise my wealthy tax clients on various tax strategies to save them money for their own real estate businesses.
One late night when I was working at the office, I was reviewing a client tax file and they were making a boatload of money and building their wealth with apartment buildings.
Have you ever had that feeling like…"if this person can do something I know I can?"
Sometimes this feeling comes from a position of feeling pain. As a CPA and working crazy hours especially during tax season, I was barely home to see my wife and two girls. I was missing the “magic moments”. I knew I had to make a change.
I took to the internet learning about apartment buildings.
I read books.
Any chance I had I was educating myself, listening to trainings in the car, etc. It was a priority to figure out the education side so I knew the nuts and bolts of buying apartment buildings.
Once I felt comfortable, I went out and bought a duplex. Based on the numbers the property was already cash flowing, but one of the units was vacant. I filled that vacancy and the additional rent went directly into my pocket.
It was definitely a cool feeling.
Now granted this was a small property, but working with my tax clients who were making money with large apartment deals, I knew the model worked and it was scalable.
Although I was still working full-time as a CPA, I went from buying the duplex in 2008 to trying to acquire a 130+ unit deal in 2009. The deal at the end of the day didn’t work out. Using my CPA background, apartments are all based on the numbers. The deal just wasn’t good enough for my investors.
In 2010 my partners and I bought a 270+ deal. The deal was bought for $4.5 million and it appraised for $12 million.
In 2011, I decided to quit my CPA job at a top 100 law firm in the world to pursue my real estate business.
Was I scared – you betcha.
Did I have fear – yep.
Did people think I was nuts and crazy – Oh yes.
Getting a real estate business started is tough. But with determination, passion, commitment, desire, focus, I know what my end result would be.
In 2013 I bought a 140+ unit deal for $10.3 million.
In 2014 I bought a 200+ unit deal for $6 million that appraised for $7.4 million at purchase.
In 2015, I will be closing on a 100 to 400 unit deal.
So if you ever want to “graduate” up to buying large apartments, my friends, it can be done.
Just know going in that the road and pathway has challenge. There is no easy button.
I believe that with a clear understanding on your “WHY”, anything can be accomplished.
Congrats Brian!
@Ron Garner, thanks
Congrats Brian. You must have liked that appraisal when it came in.
Amazing very inspiring!
what's your exit strategy on this purchase and how many investors total where involved. Thanks
@Brian Adams congrats on another successful syndication! It looks like you got that last $3 million together pretty quickly. Do you have any pointers for doing it on a smaller scale? I'd like to raise $1.5-2 million to purchase and rehab a small apartment building; under 20 units in an A class neighborhood
Philip
I just got done raising $1M in about 2 weeks. This was my first time down this road. I will share a few things:
1) Start your spreadsheet of contacts you know and keep adding to it everyday. Take folks out for coffee chats and warm them up to what you are doing even before you have a project and gauge interest. Ideally, 3 - 6 months before you have a project.
2) Sources came from: Work, family, friends network; Local MF meetup group and Bigger Pockets.
3) Once you have a deal to show, it will be all about:
- You, do they trust you. I had more success w/folks that knew me than folks that had never physically met me (i.e. BP)
- Right Market? Are you doing this in a small town or in a big MSA where job diversity, job growth and pop growth are real. You want the latter.
- Right Deal? Do the numbers get people interested 10% CoC; 20% IRR on conservative underwriting? Are you buying the property well below comps and rents well below comps?
- Right Team? I decided to team up w/experienced syndicator w/a track record. Without it, I would have a much tougher time, but I'm building a track record I can use for my own deals later.
@Manuel Gonzalez, the exit strategy will be a 3 to 5 year hold and 27 investors.
If you would like more deal specifics, please click this link Closed a 240 Unit Deal
@Philip Bashaw, personally I think all capital raises regardless if it is $100k raise to $5 million are the same.
For example, you need the right deal, in the right market, matched up with the right investor, with the right person operating/managing or involved with the deal.
Also you need to be able to clearly explain the opportunity to the investor and show the investor how they they will get paid a return (cash flow), how they will get their capital back and when they will get paid back.
A pointer for you is to make sure you have more potential investors than you think you will need as people's financials situations change from when you first present the deal to when you are asking them to fund their commitment.
Good luck on your raise!!
@David Thompson, that is awesome - congrats!!!
I didn't see your message when I responded to Philip and you are exactly right.
@Brian Adams congrats on closing your latest deal. please keep posting your successes it helps me keep my eye on the prize.
@David Schwan, thanks and will keep you updated on future opportunities.
@Brian Adams , what is the best way to find multifamily deals? Looking thru loopnet and there does not seem to be much out there.
@Dennis S., there are many ways to find deals such as using brokers, direct mail, other investors, BP forums.
Personally I haven't ever bought anything off of Loopnet, but it is a good starting to see what is available.
I was wondering the same thing! Moving to North Philly from California.
@Brian Adams If you don't have good credit but you have experience can the HML/bridge lender still finance your asset ? If so, do you have any HML /Bridge lender you can recommend. ?
Secondly, how do you keep your investors in contact monthly , it sounds as if you have 20+ or so investors per apartment purchase ?
Thank you @Brian Adams Bringing a credit partner and later down the road in order to refinance would that complicate things again or would it be the same scenario since they are focusing on the project correct ?
Originally posted by @Brian Adams:@Michael J., good questions, but there were more than a few. :))
I recorded this video for you and I hope I covered everything
[REMOVED]
Any chance there is a transcript, or if the video has been moved to a different site? I'd love to hear the answers to the questions Michael had asked you!! Long shot, I know, as this post is from a year ago. :(
Here is the original post with all the questions:
Thanks for taking the time to make a post like this @Brian Adams .
So far I have primarily been interested in SFR and rehabbing for retail, I am just getting started in the rehabbing. Buying multi’s has been an interest and I think it is the direction I want to go long term after building up more experience and capital. Especially after listening to the Grant Cardone podcast it opened my eyes a lot to the potential of large scale multi investing.
If you don't mind I have a few questions that have been bugging me about investing in multi’s
- 1. In general what cash flow do you look for per unit after all expenses? $100 a door, $200 a door ect.
- 2. Is the goal to hold long term or buy, fix, increase income and sell after so many years?
- 3. Do you specifically look for run down mismanaged properties so you can add value or just look for decent properties for a good deal in the right markets?
- 4. Do you rely on cash flow for returns or the payoff when selling?
- 5. When investing in large multi’s out of state I would assume that you have to do this full time for boots on the ground work, I guess it’s safe to assume that if you have the means to do it you are doing it full time also. Does that sound about right?
- 6. What do you consider the sweet spot for number of units and being able to manage it easiest or does it not matter if you use third party PM’s? I have been under the impression that the more units the easier to manage with onsite management.
- 7. When you have several large complexes under your belt does the PM employees or company deal with most of the management freeing up your time to find other deals? Wondering how owning part of 1000’s of units affects your time when it comes to day to day management.
- 8. I am all ears if you have suggestions on other materials to learn large multi investing.
Thank you for your advice.
@Dawn Roof, thanks for your message, I don't have a transcript and can't seem to locate the video link.
Originally posted by @Brian Adams:
@Dawn Roof, thanks for your message, I don't have a transcript and can't seem to locate the video link.
Ah bummer! Ok thanks so much for tying to find it Brian!!
Just wanted to give an update on a 200+ unit off market deal I bought 2 years ago.
Within 15 months I added over $4 million of equity.
To learn more, click this link: Bought 200+ Unit Apartment Complex, Increased Value Over $4 Mill