I have spent a great deal of time to learn about apartment complex investing and the art of syndicating deals.. I also am a residential real state agent, which is done in addition to my normal 9 to 5 JOB... I also am married and have 2 little girls. So, I have been spreading myself thin... The biggest reason I got my real estate license was because I did see it as a viable business option, but also because of limiting beliefs about getting myself going with investing. My funds are limited, and I am tired of working a normal JOB but feel stuck. I know at this point I need to just focus my attention after work and go. I thought I would see if any experienced investors would weigh in on why or why not I should do one or the other or try and make both work. Any feedback is appreciated. Thanks!
It might not be what you want to hear but having limited funds will make it harder for you to do apartment syndications. Anything is possible of course but generally you'll need money, experience/knowledge, and deal flow. Two of the three is preferred but you should have at least one. Starting out with limited funds gives you really nothing. You'll have to leverage all three of those from other people, so you'll have to find something to bring them to make it worth it.
Since you're already a real estate agent, perhaps you can use that side gig to increase your funds for now.
Here is what I have seen other brokers and agents do who can't, do not have the capability, or do not want to syndicate directly. They bring a deal to a syndicator buyer and then get a small equity slice of the deal along with the commission.
So you make commissions but also through deal with syndicators get small equity slices that over time can start adding up. Example if you have 5% for example and it starts out being worth 50,000 but ends up being worth 150,000 in 2 years with equity growth. You start putting larger ones of those together while you do regular closings for cash. You should already know your (spend through rate) with the minimum income needed to support yourself and family. The goal is to eventually be getting enough passive income in that your surpass your spend through rate. At that time theoretically you could possibly not work another day in your life and live off of the income only.
Grow your knowledge level to work on larger and larger deals. You then get bigger pops of income off of one transaction.
Thank you @Joel Owens and @Michael Le for the feedback! Joel, I am not familiar with the phrase 'spend through rate', can you give a quick explanation? For both of you, and maybe more towards Michael, I understand I need to bring value for those to bring up money.. What would your take be on the guys like Michael Blank, Peter Harris and a few others who teach investing without needing money or a life full of knowledge? Obviously the trade off is bringing the deal and having enough knowledge to know you have a deal. But they seem to give hope to guys who are willing to put the time in, but may not have the personal financial background and are looking to get started. Which is where I stand. I have access to some deals from my own brokerage and plan on networking with other brokers beginning this week. I have put the time into learning and will continue to grow in that aspect. I still lack a mentor which is next on my list. If you guys could recommend someone that would be great! I know a mentor can be key when starting off and even finding new mentors as you grow are still vital. Thanks again for your input!
Spend through rate is what you spend each month to live on. You have personal expenses and business expenses.
Take a look at your current personal finances. See what wants are from truly needs. Start with high interest loans and credit cards. You want to make money off of other businesses and people not the other way around. There can be good debt where you are investing and compounding returns for more than what you pay out in interest. First you want to try and cut down the other debt though.
With the highest credit card interest see if you can transfer that balance to a zero interest rate special for a certain time card to work on paying off. If you can't ask the card company for a interest rate reduction. If they won't budge then maybe ask for a credit limit increase. That might at least help your debt to credit ratio and help the score go up which could open you up to those low to zero interest introductory offers.
Once you have cut all of your bills down to the lowest amount you feel comfortable with that should be your starting personal spend through rate. It might be 3,000,4000,5000 a month. Take the savings and start investing to create 100,200,500 a month cash flow etc. The goal is to build over time to surpass that 5,000 a month for example that you might need to live on. Once you have done that your investments as long as they are performing could pay you to live on permanently. Inflation will happen but rents should still keep going up annually unless a flat market.
@James Reyes I think it's certainly doable, it's just harder. I think hard work can overcome a lot, so if you have the time and energy then go for it. If you have friends and family who trust you, has capital, and believe in your education enough to partner with you then that works. But just starting small helps. Get 20 people together at $25k a person and you can get a smaller 30-40 unit apartment.
Various ways to get into the business. Two most common ones are finding deals for syndicators and raising capital. I find the latter would be the easiest path because most syndicators have their own relationships built, full time analysts and have strict criteria. All seem to need capital to go after more and bigger deals no matter how successful they are. I'm more than happy to chat w/you offline about that latter and ways you might think about getting started.
Thanks everyone for the input! It's helped put some things in perspective. Very much appreciated. @David Thompson , I will send you a PM. Thanks again!
Thanks @Chris Tracy ! I will give it a listen. I just finished reading your book! Loved the to the point message of to take action!
Oh hey awesome... I'm glad you enjoyed it!