What are the Steps to Owning 300 Units?

Question

...preferably a single complex...or 3-100 unit buildings...

Logan Allec · Answer

I don't want to put words in @Brandon Sturgill's mouth, but by his profile, it looks like he already has some experience with smaller properties, and I'm thinking his question was not so much, "What is the infrastructure that I need in place in order to acquire 300 units?"--I'm pretty sure he understands the obvious, i.e., that he's going to need various staff people, professionals, consultants as well as significant capital--but more so a multi-year roadmap along the lines of, "How, over time, can I get from Point A--where I am now with my 5, 10, 20 units or whatever and my SFR rehab business--to Point B, the owner of 300 units?  How do I scale?  What connections and relationships do I have to make and how do I make them?  Has anyone here done this before and how did you do it?  What 1-year, 5-year, 10-year, etc., goals should I set for myself?  When do I know I'm ready and that I should begin seeking to put the necessary infrastructure in place and actively seek financing?  I know nothing is certain, and there's no recipe to follow that will yield surefire results in real estate, but some guidance would be nice."

Joe Fairless · Answer

@Brandon Sturgillthe cliff notes version of an answer is:

1. Be an expert on the underwriting and market analysis

2. Know how you'll finance the property - speak to mortgage brokers and local banks to get verification on any assumptions you have

3. Build a team - legal, tax, mgmt, brokers, finance, advisers)

4. Find a deal that fits your biz model and close

5. Manage or over mgmt to ensure biz model is being carried out

As for the longer version, that is an entire book. One book I recommend is The Complete Guide to Buying and Selling Apt Buildings by Steve Berges

Account Closed · Answer

NA Beard is spot on.  In addition to what J stated above, how are you planning to finance this/these investments?  Even with the required 25-30% down payment, due diligence expenses, closing costs, and capital reserves, a lender is going to question the operator's experience.  Do you have a team in place to help analyze and operate these assets?

With that said, you're definitely in the right place to learn about all things multifamily.  There are BP podcasts with experienced multifamily operators that have a wealth of information.  I'd start by listening to these as well as reading the BP articles on multifamily investing.  Another great resource is Kevin Bupp's Real Estate Investing for Cash Flow podcast.  Best of luck!

David Dey · Answer

Brandon, it is quite the noble undertaking you aspire to.  I did at the peak of my career have over 300 units I personally owned and managed.  (Didn't sleep a wink!!)  than the crash came and I lost everything, but not before learning some valuable lessons of what to do and more importantly what not to do.

The best advice I can give you, do not be an island unto yourself.

There is a reason most larger complexes are not owned by individuals and small businesses.

"It takes a village to raise a complex!!"

If I were to do it again, (and I just might)  I would start first by building a fund.  I would incorporate the infrastructure that NA Beard mentioned, and I would hire a number of people way smarter than me.

Then I would raise enough capital to be very well funded. (You can start with a number of the private lenders who have backed you on your deals this far)  The worst thing you can do when taking on such an undertaking is to try to work this on a shoestring.

To summarize, play to your strengths, and have like minded people that bring to the table the things that you need.  Be well funded and then pick the right projects.

Hope this helps

Christian Brodin · Answer

Brandon. Where are you starting from? Are you just getting started or are you already on your way owning real estate already?

Having a goal is great, but there has to be some sense of realism too. Most importantly do you have:

- investment strategy

- equity

- financing

- apartment management experience

- knowledge of building maintenance, or assessing capital expenditures

- knowledge about the market, returns

I have seen people go from 0 to several hundred units, but most of them are great at raising equity and also analyzing deals to find the right investment.

As you take on more apartments the criteria to borrow money will change and someone will need to be the guarantor for the loan. They again will need to have solid financials, and or operating history.

So before I answer your question it would be very helpful to understand where you are starting from.

If you have any of the above, it is more clear cut.

Christian

Jeff B. · Answer

OUCH !  Lot's to consider, but without doubt, it would take over your life.

Something this big is a full time business and you need lots of support:

• a legal entity
• a business staff
• a maintenance staff
• a legal consultant
• a tax consultant
• state employment issues
• Errors and Omissions Insurance

This size operation should only be considered (imo) by persons experienced as business owners and certainly not a newbe to investment / rentals.

Justin Gottuso · Answer

@Logan Allec

Are you also a psychologist on the side? Haha you have a way of understanding what people are (really) saying :-)

Brandon Sturgill · Answer

@J Beard @Lorenzo Clark @Manolo D. @Joe Fairless @Brendan Kelly Thanks for your contribution, gentlemen.

Brandon Sturgill · Answer

@Logan Allec Thanks for taking the time to decipher the question...couldn't have said it better myself.

What are the Steps to Owning 300 Units?

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