“Go Big Or Go Home?” Or Start Small and Build Up?
Real Estate Agent · Wichita, KS · Member since 2019 · 19 posts · 3 votes
Hello BP. I am wanting to get into real estate investing, more specifically larger multi family. I have book knowledge and from BP Podcasts but I don’t have any experience yet though and was wondering tips on how I should go about it. Should I start small with single families, small multis, or go straight ahead into 20+ unit multi families? In other words, will owning and operating smaller family homes translate into the larger multi families or is it a completely different game? I don’t want to waste much time in the smaller scale family homes/rentals if the skills don’t necessarily transfer & I’d have to essentially start over from scratch. Just really curious about other people’s thoughts and personal experiences. Thank you in advance!
I knew a guy that used to say go big or go home all the time. I used to say to him you mean go big or go bankrupt. Well, he went big and he went bankrupt. True story. Just know your risk and know what you are getting yourself into. Slow and methodical wins the race.
Warren Buffet was asked why no one ever copied his investment style and thesis. He told them because no one wants to get rich slowly. Lesson here.
Hello BP. I am wanting to get into real estate investing, more specifically larger multi family. I have book knowledge and from BP Podcasts but I don’t have any experience yet though and was wondering tips on how I should go about it. Should I start small with single families, small multis, or go straight ahead into 20+ unit multi families? In other words, will owning and operating smaller family homes translate into the larger multi families or is it a completely different game? I don’t want to waste much time in the smaller scale family homes/rentals if the skills don’t necessarily transfer & I’d have to essentially start over from scratch. Just really curious about other people’s thoughts and personal experiences. Thank you in advance!
What others are ignoring is the fact that many people started in single family or small multifamily and have done very well. Some people just hold a small profitable portfolio, others move up over time to larger buildings.
If the choice is go big or go home, odds are good you will go home and be left with nothing. Most the people who join BP with real estate dreams, never buy a single property. You are far better off buying a duplex to get started versus buying nothing. Also from a practical standpoint, you may not be able to go big starting out. Again, better to get into something and move up, then to just walk away.
But yes, I will agree if you can get into a 500 unit building and do it profitably as your first deal, that is wonderful. Go for it. If someones idea of "going big" is entering into a syndication where you own 2% of a 500 unit building, that is not going big. That is like me saying I own Apple just because I have a few shares.
Lots of useful information from ton's of experience on display already. You might want to get some more education and learn the business if you consider going bigger. It's worth it in the end. I went from 1 single family to 62 units 5 months later and another 41 units 4 months later from there. Reason was I didn't want to do 100 single family homes, preferred to scale faster but with that came education through a ton of different forms. Please feel free to reach out if you want any more details but good luck in your journey.
Hello BP. I am wanting to get into real estate investing, more specifically larger multi family. I have book knowledge and from BP Podcasts but I don’t have any experience yet though and was wondering tips on how I should go about it. Should I start small with single families, small multis, or go straight ahead into 20+ unit multi families? In other words, will owning and operating smaller family homes translate into the larger multi families or is it a completely different game? I don’t want to waste much time in the smaller scale family homes/rentals if the skills don’t necessarily transfer & I’d have to essentially start over from scratch. Just really curious about other people’s thoughts and personal experiences. Thank you in advance!
What I think is missing in this discussion is why you want to invest in large MF. Is it because after self reflection and study you determined that asset class aligns well with your knowledge, skills, and abilities or is it because you heard some folks on a podcast talk about how super duper awesome MF is?
The asset class is nothing more than a vehicle to help you attain your goals, not an end in and of itself.
@Maksim Easley
I am in a similar situation. Although, I recently started working under a real estate investor who "wholesales" apartments and SFH and I asked him the same question. His advice to me was to skip the SFH's and go straight to apartments because they are easier to scale, manage, and handle vacancies. So now I am looking to network and save until I can help fund the purchase of a complex!
going bis works for me. You have to spend the time and energy anyway. Fortune favors the bold.
@Maksim Easley. Hi there. Nice to meet you. Get ready, let's go for a ride.
First off, we don't have nearly enough information to say what YOU should do. We don' t know your skill level, your resume', talents, preferences, business acumen, ability to judge people, current net worth, knowledge of tax law & landlord/tenant law or anything else pertinent to say whether or not it would be a good idea for you to try to purchase millions of $ worth of real estate.
Step 1: Write out your resume'. Pretend you're applying for a job with starting pay scale of $250,000 annually. You resume' must explain in clear terms why you should have that job vs. the 1,000 other people who yesterday thought, "Hey, I'm gonna go do real estate and make loads of MONEY!" Then find someone who earns at least $250,000 doing real estate and hand them your resume'. Convince them with facts and proofs that you are the man for the job. No talking about dreams, podcasts, and "Should I's?" People who earn a $1/4 million / year KNOW things...they GIVE answers. Be willing to accept criticism and revise.
Step 2: If you make it this far, you will have undergone a brutal self-assessment. That's good. Now it's time to figure out who might be a good mentor. You've got your resume' so happy hunting. You will be much more successful convincing someone that you are worth their time.
Now that I've totally crushed your dreams, do not fear! I started small and by the standards of some on BP I am still small. Fewer than 50 units, but I have survived the Great Recession and am personally debt free except. I only owe on a few rental units. I am profitable enough to do just about whatever I'd like, including "Go big or go home"... in other words, if I did something in REI and totally failed, I've got enough back up income and assets to have a home where I could go!
Which brings me to the last iota of wisdom....fixing what that saying means. "Go big or go home" doesn't mean, "Dreaming, inexperienced broke people should only buy $10 million mega-plexes". It means that you should have a goal that's big enough to stretch you. When you START real estate investing, simply owning and managing 2-5 houses can be considered "going big". You've never done it before. It's a stretch. You may get 3 units in and decide that's enough. What's your rush? Afraid all the good deals will be gone if you don't buy one in the next 12 months? False info. There will be plenty left in 2020 and 2021 and 2022, etc.
Best wishes.
Hello BP. I am wanting to get into real estate investing, more specifically larger multi family. I have book knowledge and from BP Podcasts but I don’t have any experience yet though and was wondering tips on how I should go about it. Should I start small with single families, small multis, or go straight ahead into 20+ unit multi families? In other words, will owning and operating smaller family homes translate into the larger multi families or is it a completely different game? I don’t want to waste much time in the smaller scale family homes/rentals if the skills don’t necessarily transfer & I’d have to essentially start over from scratch. Just really curious about other people’s thoughts and personal experiences. Thank you in advance!
Besides your comfort level and financial statement/ability to go big right out of the gate, I think it also depends on what you can find in the market. At the McCurdy auction in town before this most recent one they had three 12 unit complexes next to Newman University near Kellogg (three quadplexes per complex) and all three went for $450,000 plus a buyer’s premium. The tax appraisal was 1/3 of that. Unreal. That is $37,500 a unit before the buyer’s premium. You can find duplexes and single family homes on a per unit cost for that or less than that depending on area. Why go big when going small pays better? Perhaps large multi family will get less overheated here soon, but right now there is next to no inventory and it’s overpriced.
Are you buying and holding? Buy, rehab, and sell? From your posts, I'd say starting with a 2-4 unit (residential multi family) will benefit you in experience, vetting out management, and even with small rehab and improvement projects.
Decide what youre going to do, define your sub market, asset type, and build from there. More learning will help you get clarity.
Not necessary to start with a SFH in my opinion