I quit my CPA Job to buy Large Apartment Buildings

368 Replies

@Brian Adams  Yes, the 4 Ds make it an actionable strategy. 

For the Deals portion, you mentioned Marcus & Millichap for market analysis

Any other resources for finding info on actual availability, like Loopnet, but a bit less public, so I can locate units before the rest of the world sees them?

@Jai Reddy , I really wish I could give you the magic button, but no, I am not aware of sources where things are less public.

To locate off-market or pocket listings, you need to create relationships with brokers, other investors, attorneys, title folks, management companies, etc and share with them about the types of deals you are looking for. The better you can educate them on what you want the faster the right deal will come across your desk before it hits the open airwaves.

I also use direct mail, I bought my 200+ unit deal this way.

@BrianAdams 1st of all i want to say thanks for being inspirational to me & others my question is a a investor who hasn't done alot of deal & doesn't have stock options..7 figure job etc how realistic is it to start doing apartments..i have a few flips under my belt and after reading posts like yours & doing a little research I  see that multi family is the next phase for me..how hard is it for someone starting with  nothing but knowledge 

@Brian Jones , thank you for your kind words. I am not proclaiming to be an expert in this field as I am learning just like you, but I was in your same shoes so I know exactly what you are feeling.

If you don't have the financial capacity to take a deal down yourself, use your knowledge and add value to someone else who can help you get you where you need to be. 

Maybe you have the best deal finding techniques out there. Similar to building a buyers list for single family homes, build a buyers list for multi's. Bring your deals to someone and see how you can participate in the opportunity. This will help you create a track record with apartments.

Use your current experience of flipping houses and showcase your expertise in these projects to prospective investors. You need to grow out your investor list so you have private money ready to close these larger deals.

Finally, and I fully subscribe and support getting educated in a particular investing strategy. However there are times after you have mapped out a clear plan that you just need to push all your chips in and make it happen my friend!!

@Brian Adams great story! I also quit my CPA gig in 2012 to go full time into apartment and SFR investing. I was lucky enough to build enough sustainable cash flow by the time I quit that the transition was easier than anticipated.

It sounds like you are syndicating deals. What structure are you using for preferred rate of return and target IRR? What are your hold periods? Have you sold any of your purchases yet? Are you taking down any of these deals yourself or are all syndications?

@Serge S. , great job!! I have used a syndication strategy to take down the assets and the hold and pref return to the investor varies.

@Brian Adams my question about loan terms had to do with exit strategy. If you are looking at short term exits to refinance or sell (say 3-5 years), what type of assumptions are you making with regards to interest rates and a possible increase in cap rates?

I think the economy may be stronger then, but will rising rents be enough to offset high interest and cap rates?

Originally posted by @Brian Adams :

Hopefully this image will come through okay - this is how I structure it. The large apartment building is bought in an LLC and the equity investors purchase LLC units in the LLC.

Sorry to be repetitive here, but I am not an attorney, so make sure you get a legal expert to structure your deal.

Brian, great post and fantastic information.  Thank you.  In your image it says lifecycle of deals range from 3 to 7 years.  Does that mean you plan on selling the complexes at that point?  And do you expect them to sell for the high valuations you gave?  In other words, is that where you make a huge profit?

It's cool that I can say "I knew you when...", @Brian Adams .  Then again, you are one of the few on this site that can say the same thing about me. It's been cool to see your business take shape over the years and even better to see it in print. Keep up the good work.

Originally posted by @Brian Jones :

@BrianAdams 1st of all i want to say thanks for being inspirational to me & others my question is a a investor who hasn't done alot of deal & doesn't have stock options..7 figure job etc how realistic is it to start doing apartments..i have a few flips under my belt and after reading posts like yours & doing a little research I  see that multi family is the next phase for me..how hard is it for someone starting with  nothing but knowledge 

As you move into Apartments the knowledge you need makes a significant change.  As @Brian Adams and others have mentioned education is key.  You need to understand how to valuate a commercial property, but you also need to broaden your network of potential investors and team members.  I do feel the best way to learn any new strategy is to find someone that is successful in that strategy and find out how you can be of service to them.  Find out what you can offer to help them and learn by being let in the door. 

@JeffGreenberg thanks a bunch yes makes alot of sense to get with someone who is doing the business..yes I am gaining knowledge but its nothing like actually doing so thats what im anxious to get started on..thank you again very much

This is a great thread... What in you opinion is the ideal multi family purchase? I know the short answer is; depends on location, economy, rents, etc....but what's your ideal deal? A,B or C, location/ economy type, occupancy etc....?

@Brian Adams You have a very inspiring RE Investing story! I don't know if you ever come to D.C. or Maryland, but I had founded a Real Estate Club here at the University of Maryland Business School,  and I would love to have you do a presentation to our club members of your investment journey!  

Kind regards

Val

Originally posted by @Brian Adams :

Thanks Ryan and I appreciate you responding and good luck with your switch. 

As a quick tip - get your plan put together, like what types of deals do you want to buy - A properties to C properties, how many units, what is the purchase price, how much capital do you have access too, if none - starting developing private money connections, network, determine location of the properties, get a team in place: brokers, management company, mortgage lenders, private money, real estate attorney.

Brian thank you so much for sharing. I've learned that the BP forums are a great place to learn. So I'm grateful for people like you who share the knowledge with newbies like myself. I'm taking it all in and learning to step aside from my fear of being so green and just  do my best to educate myself then get myself in a position where I can apply what I learn. Apartment buildings are a longer term goal for me. 

Brandon B., over the years I have spent some time studying different types of real estate investing.

In my opinion, and I was fortunate to see as a CPA my high net worth clients crush it with apartments and also someone who has bought a multi, apartments are hands down the IDEAL investing strategy. Apartments produce:

  • Income
  • Depreciation (Great Tax Benefit)
  • Equity
  • Appreciation
  • Leverage

My ideal deal is where we can solve a problem and force appreciation.

If you are not familiar with the concept on how to force appreciation, you can click this link for a quick video discussing a value play strategy (note you don’t need to opt-in to view the video):

[REMOVED]

@Val Csontos , thanks for the offer to come to MD. I don't have any immediate plans to be in your area, but possibly we can schedule a webinar training or something.

@Brian Adams

Fantastic post. I'm a CPA myself (audit side) who moved into private industry in 2010. Been saving ever since and looking on buying my first single family soon. Offer went out this weekend actually. This is actually where I would like to get to so you describing the step by step process is very inspirational. Thank you.

@Terry Alexander @Brian Adams Hey Terry, I too am interested in big multi-family units. Brian is right, finding the market is key, I just finished Dave Lindahl's book "Emerging Real Estate Markets". It' has a lot of good points on making the jump to big buildings, especially finding the market. Good luck! 


@Brian Adams I understand that coming over to the University Campus might not be feasible, and I think a Webinar would sounds great too! I would like to pm you in the next few weeks. Thanks again! Kind regards

Val

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