Should I take a course in multi-family modelling before investing

14 Replies

Hello everyone,

I am curious if people recommend taking a course such as REFM or a BIWS course before investing in multi-family real estate.  Alot of the gurus seem to say all you need to know is income and expenses, but coming from an institutional investment consulting background I feel as if that is way to basic for me to justify the valuations.  Has anyone taken any type of Multi-family valuation course they would recommend before diving into an investment?

Thanks!

Courses never hurt, but they aren't 100% necessary. I have learned through books and hard knocks. When I started there was no podcasts and no bigger pockets. I did not take a single guru course or any formal training. I'm not saying that is the best way to do things, but waiting until you are 100% prepared and educated will not allow you to ever get started. 

My philosophy is get educated (not too much), create goals and purpose and take massive action

Collin,

Additional education can NEVER hurt. I took the CCIM 101 course and it was the best money I'd ever spent. Four and a half days of classroom with an amazing instructor learning everything from time value of money , to valuations, to cap rates, to internal rate of returns.

Although I've been investing for several years and have a mid size portfolio of sfr's it def gave me more confidence that I can analyze deals with the best of them.

@Collin Borns Some of it boils down to price. If these courses are $500 instead of $5,000 or $50,000 you're literally dealing with order-of-magnitude differences compared to many programs referenced on BP. Personally, I think the biggest lesson is in building your own spreadsheets to see how it all works. One of the challenges with any course is that the economics, ratios, cap-rates, etc. aren't uniform from market-to-market. San Diego isn't Memphis and Memphis isn't Big Sky. So the "process" to arriving at a valuation might be similar but defining a "good deal" isn't anything that a one-size-fits-all-course can bring to the table. At least not in my opinion. Others, of course, believe differently.

@Andrew Johnson I agree, but I am nervous if I would start out by building my own model there could be a chance of missing some major line items that could mess up the entire valuation.  Would you agree that it would be smart to start with a template and massage/edit it to fit my market?

@Collin Borns I wouldn't worry.  Build your spreadsheet, do an analysis on something that looks interesting, screenshot it and post it on BiggerPockets and let the community mock and castigate you :)  

But, really, it's not a bad idea. And I'd also posit that a general rule of thumb is that if you analyze 5 deals and they all look great to you...well...you're missing something. It's hard to find a good deal and if it seems easy (as a newbie) most of the time you're either really optimistic about rent potential or are missing things like paying water for 10-units because you're used to tenants in an SFR paying utilities.

If you are looking for slightly bigger, say 75+ units, then I would recommend Michael Blank's analysis tool which is only $99 I believe.
He also has many videos on how to use it.

The key with any model will be knowing what numbers to plug in for your sub market

A lot of it is about how you learn. Some people prefer coursework and REFM can be good for that, other more mentoring and others learn by jumping in and doing.

I'm a big fan of using analysis as a way to teach yourself because you always end up with questions, which leads to you trying to answer them. We learn best by going through that pain.

So starting off building your own spreadsheet will help you process the data in your own way, and don't worry about doing it wrong. You'll find the right way as you progress.

@Collin Borns

Everyone has a different pace when it comes to riding the learning curve.  I personally feel that some sort of education is important to your success.  Respect the business by studying it, attending various networking events, and speaking to successful investors are all great ways to help begin your journey in this business.  

I've never taken a course and bought over $50m in property. I'm not a "guru" fan but if that's what they say then that's one thing I'd agree with.

Determining what's a good deal isn't that hard. You only have a few line items that'll make up 80-90%. Rest can be pretty accurately assumed.

I don't even ask for seller financials anymore as I can proforma the deal and come closer to what I see than if I go off what they've seen.

What works well is to:
1/prepare questions of the stuff you don't know and ask experienced brokers, syndicators, lawyers, accountants...
2/take one real estate spreadsheet from @Michael Blank or BIWS or whatever else you find and do it yourself from the start. You will learn how everything us glued together.
@Todd Dexheimer is right: Reading is important but you will learn more by doing. Good luck.