Out of state Multifamily investing and learning

Multi-Family and Apartment Investing
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Out of state Multifamily investing and learning

Raj Kumar
Investor · Austin, TX · Member since 2014 · 34 posts · 4 votes

Hello,

I have been doing fix and flips/buy and hold investing in SFR properties in Chicago area. I have full time job but was able to continue doing the REI in Chicago area. But, recently I started looking into multifamily investing(20+ units) and found it to be more appealing from returns and operations perspective. I have started learning about them by listening to podcasts and doing a lot of reading. Based on my research, I found that most of the multifamily investing happening in emerging markets (Texas, Atlanta, N. and S. Carolina etc.) which are out of state for me. I have never done out of state investing. I also want to learn to the point of being an active investor and potentially learning syndication etc. I am also looking into mentoring programs to speed up my learning. Has any one done out of state investing in multifamily and be an active investor ? What are the strategies you implemented to achieve success in out of state multifamily investing? Any of your inputs/ideas are appreciated. Thank you for your help.

Best,

Raj

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Chris Tracy
Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
8y

Hi @Raj Kumar- The key to investing outside of your backyard is to buy properties that are large enough to afford full-time QUALITY property management.  For most deals, the sweet spot will be around 75+ units.  Really good property management is one of the biggest things that will make or break your deal.  Another crucial factor is to make sure you are buying a deal that has a viable and significant value add opportunity.  Don't just buy any old deal and/or one that is mediocre at best and doesn't get your investor partners excited!  Hope that helps.  

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  • Chris Tracy
    Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
    8y

    Hi @Raj Kumar- The key to investing outside of your backyard is to buy properties that are large enough to afford full-time QUALITY property management.  For most deals, the sweet spot will be around 75+ units.  Really good property management is one of the biggest things that will make or break your deal.  Another crucial factor is to make sure you are buying a deal that has a viable and significant value add opportunity.  Don't just buy any old deal and/or one that is mediocre at best and doesn't get your investor partners excited!  Hope that helps.  

    4Reply
  • Michael Le
    Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    Make sure you have a strong team all around. As @Chris Tracy mentioned, property management is key especially if you're investing remotely. That's just one team member. You mention looking for a 20 unit but you'll likely need to go larger so you will have to team with other people for additional capital, experience, and perhaps local boots on the ground asset management. 

    3Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    8y

    I recently wrote a few articles on out of state investing. See below for the links. Also, the markets that you listed are not emerging markets. Those markets have been hot for a decade and longer. I am not saying that they are bad markets, just not emerging. 

    https://www.biggerpockets.com/blogs/10145/74387-ke...

    and

    https://www.biggerpockets.com/blogs/10145/73999-ou...

    and this one to help identify emerging markets: https://www.biggerpockets.com/blogs/10145/66508-ho...

    0Reply
  • Raj Kumar
    OP
    Investor · Austin, TX · Member since 2014 · 34 posts · 4 votes
    8y

    Thank you @Chris Tracy , @Michael Le  for your responses. Your responses are helpful.

    Thank you @Todd Dexheimer for your response and links for information. Really helpful.

    I am working on building the relationships in some of the markets I am interested in. I am looking into investing passively (100K ) in the MF investing to begin with to gain some experience but I am concerned that I will be stuck in the deal with funds locked and this slows down the path to reach my goal doing more deals. What are the strategies I can follow in doing more deals even with limited funds ? Thanks again for your help.

    Best,

    0Reply
  • Chris Tracy
    Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
    8y

    @Raj Kumar- The trick is to be a syndicator like all these people here on BP!  When you leverage other people's money, the sky's the limit and your concerns of being stuck will be no more...

    0Reply
  • Jay Chang
    Developer · Los Angeles, CA · Member since 2017 · 157 posts · 84 votes
    8y

    Perhaps try extending your network in the local area and see if there are other investors looking for partners. I am part of the ULI in LA, and this organization is really good for connecting with local real estate developers/investors. There is a chance that they may be investing out of state. You can also meet arch, eng, and other consultants through this organization.

    Good Luck,

    0Reply
  • Todd Dexheimer
    Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
    8y
    Originally posted by @Chris Tracy:

    @Raj Kumar- The trick is to be a syndicator like all these people here on BP!  When you leverage other people's money, the sky's the limit and your concerns of being stuck will be no more...

     I hope there was some sarcasm in this. Sky is the limit with syndication, but there are a ton of concerns still to address if you are syndicating - it's not all roses, so if you go that route, really think it through. 

    0Reply
  • Chris Tracy
    Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
    8y

    @Todd Dexheimer- No you're right... raising private money is hard work and often comes with many sleepless nights... I was just addressing @Raj Kumar's dilemma of trying to scale and do more deals with limited funds.

    1Reply
  • Ivan BarrattBusiness Member
    Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
    8y

    @Raj Kumar if you want to be an active investor/operator I'd recommend starting small and doing a deal or two on your own or perhaps with one partner or two.  You'll learn many lessons in multifamily you won't see coming. Better to fail small and fast before stepping into the bigger deals with investor capital at risk.

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
    Raj Kumar I made the switch from sfh to mfh a couple years back. It’s actually better once you get established. As you can tell sfh is isint going to move the needle in terms of cashflow. You need a lot of them. I would recommend looking up mentorship groups and traveling to events. I don’t know any in your area. Let me know if you need any help.
    0Reply
  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    @Raj Kumar I second what @Ivan Barratt said about starting with a smaller deal if you want to learn multifamily. Also, there're tons of great books. I'd recommend you start with David Lindals' book on Emerging Markets and Steve Berges' Guide on buying and selling apartment buildings. I have a whole list in my library. If you'd like, PM me and I'll share the link.

    In terms of investing passively, if you plan to invest in syndications, then start with the ones that invest in multifamily. This will also be your "back door" into learning of what experienced syndicators do. However before you invest in a syndication, make sure to research a deal, syndicator, and the process so that you fully understand what's involved. 

    Happy to share how I got started with syndications. Feel free to PM me.

    Best!

    0Reply
  • David Miller
    Attorney · Durham, NC · Member since 2016 · 224 posts · 126 votes
    8y
    Raj Kumar I am having trouble sending you a PM. PM me. I do a lot of work in the multifamily apartment space in NC. Let’s talk.
    0Reply
  • Alpesh Parmar
    Investor · Dublin, CA · Member since 2016 · 344 posts · 228 votes
    8y
    As others mentioned, you have to start small and do it yourself before trying to syndicate. I fly out to each of the markets I am interested in and build the team. You can travel to different conferences as well as attend local meet ups, boot camps and online events to expand knowledge and meet like minded people.
    0Reply
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