Lets say you have a million bucks and looking for a Multi Family to invest in. Where do you start? Do you consider many cities and look for the best purchase, or focus on specific area that you know well and settle for the best deal there. When you find one you like, what steps do you take from there? What gets you to the point of actually getting on a flight to see it in person? looking for some rules/guidelines here. Thanks!

@Manik Sewak

I recommend you read “Best Ever Apartment Syndication Book” by Joe Fairless and Theo Hicks.

It has all the rules and guidelines you need to get started.

Thanks @Chris Coleman ! I'll grab it tomorrow!

Originally posted by @Manik Sewak :

Thanks @Chris Coleman ! I'll grab it tomorrow!

 Is that a theoretical question or are you looking to invest?

I’m wanting to invest. It will Ben my first multi family acquisition so I’m trying to build a good foundation of knowledge before taking the plunge. Account Closed

@Manik Sewak may be best to partner with experts. Better returns with far less downside.  It sounds like you're just getting started on your educational journey.  You're in the right place. Recommend you do a lot of learning before jumping in. A fool and his money are soon parted. All the best man!

Originally posted by @Manik Sewak :

Lets say you have a million bucks and looking for a Multi Family to invest in. Where do you start? Do you consider many cities and look for the best purchase, or focus on specific area that you know well and settle for the best deal there. When you find one you like, what steps do you take from there? What gets you to the point of actually getting on a flight to see it in person? looking for some rules/guidelines here. Thanks!

First step is to educate yourself thoroughly on the business and markets your interested in. You want to become an expert.

Next option would be to invest with our partner with experienced operators Ave learn from them. You could also hire a mentor to help you as well if your want to go it alone and do your own deals.

Either way you need to make sure you thoroughly understand the business so you can make prudent decisions so you can hang on to and grow your capital.

Without knowing your preference for active vs passive I would recommend a diversified approach. Look at investing in 5-10 different syndications with 2-3 different experienced groups. 

The benefits are the ability to scale quickly and removes the learning curve and reduces risk by partnering with professionals who have a proven system. You give up a little return but greatly reduced your downside my not knowing what you don't know. 

Don't look to hit a home run on any, just look to hit singles and doubles.

And as Ivan and Greg mentioned consume as much content on multifamily as you can in order to make the best decisions.

I've take a similar strategy and it has worked very well so myself as the other investors I work with. DM me if you want to know more about how I've built my strategy.

@Manik Sewak Cleveland markets, without a doubt,,,,, 10% net cap or better

If you have a million in cash, use as little down payment as possible and leverage up with our current lower rate environment. Keep 100k minimum cash in reserves for emergencies. 

If you're preapproved for a million dollar loan, then buy selectively trying to find a good balance of cash flow and property appreciation. Since it's your first deal, probably not advisable to borrow as much as you're allowed. It's a marathon, not a sprint. 

Don't consider too many cities. Pick 1 or 2 markets and focus on them. If you're brand new, as others have said, partnering will improve your performance at the beginning. If you're looking for passive income, then syndication investing is the best way to get started toward that. Otherwise, if you want to be active, you need to seriously commit time and energy to make it happen.

@Manik Sewak

Ironically I just responded to another post with identical question but slightly lower amount. My thought process is this: 

1) I'd determine whether I'd want/can do investing actively or passively

2) Learn about the investing approach and the type of asset I want to invest in based on my choice in nu.1 above.

Here's some additional guidance: 

https://www.biggerpockets.com/member-blogs/10850/86621-six-steps-approach-to-getting-started-in-real-estate 

https://www.biggerpockets.com/member-blogs/10850/86626-the-pros-and-cons-of-investing-via-real-estate-syndication

https://www.biggerpockets.com/member-blogs/10850/84064-what-type-of-investor-to-be-when-i-grow-up-active-or-passiv

Originally posted by @Manik Sewak :

Lets say you have a million bucks and looking for a Multi Family to invest in. Where do you start? Do you consider many cities and look for the best purchase, or focus on specific area that you know well and settle for the best deal there. When you find one you like, what steps do you take from there? What gets you to the point of actually getting on a flight to see it in person? looking for some rules/guidelines here. Thanks!

 Stash the cash, and wait for the crash. (correction might be more appropriate).

Multi-family prices are stupid right now. I typically would follow the don't wait to buy real estate, buy real estate and wait, but current prices are so inflated that unless you find a hidden gem somewhere I would hold off on buying multi-family.

OK, I have a million dollars. What's more important to me - not to lose money, or to make money? In a perfect world, I want both, but if all I could have was one or the other, which is more important?

My answer is always first not to lose. This means that there are only a few markets in which I want to buy at this stage in the cycle. This also means that I must buy value-add.

If you break this down to the lowest denominator all of your questions get answered :)

Good luck!

@Taylor L. Could you suggest a couple cities where there are still decent Multi Family deals?

@Manik Sewak

Where do you start? (Follow where all the path of progress is. Make sure you're in an area that's thriving and will continue to do so. Determine if there are more people coming into an area than leaving out. You can always passively invest to learn more about how syndications work from an operational standpoint. Then venture off on your own, once you have a good understanding of how the business works)

Do you consider many cities and look for the best purchase, or focus on specific area that you know well and settle for the best deal there. (I would focus on 2 markets at most when starting out. Learn everything you can about that market. Build relationships with brokers and other operators in those markets.)

When you find one you like, what steps do you take from there? (Learn more about the dynamics of the market and if it has solid fundamentals.)

What gets you to the point of actually getting on a flight to see it in person? (I would stay within a 4hr drive for my first purchase.)

looking for some rules/guidelines here. Thanks!

Originally posted by @Manik Sewak :

@Taylor L. Could you suggest a couple cities where there are still decent Multi Family deals?

Lexington Kentucky, the Carolinas, and I know some folks who are still getting good deals in Jacksonville. It's more about building relationships with brokers than anything else 

@Taylor L. Thanks Taylor! Ill have to check Jacksonville as I'm only a few hours drive away.

@Manik Sewak

Be cautious. As Ben said, first rule is not to lose the money.

Partner with a vetted syndicate, that too with a smaller amount than your 1M. Learn through their process of identifying and analyzing properties.

Temper your ‘greed’ to invest your 1M and own an asset. Instead, be greedy to learn with a syndicate sponsor.

Well, I did this. The amount was more, but what I did was drive around and look for a place to invest. Someone much smarter than me suggested I look at towns/cities with colleges/universities. I also didnt have the cash to do renovation so I looked at new builds. I wound up finding  great college town and a great property.

My suggestion would be BE CAREFUL. Everyone will have something for you to buy - here on BP and IRL. Take your time to find the right place to invest. Take your time to find a good commercial agent. Spend time learning so you have a basic understanding so you wont get taken. 

Understand that in reality you wont find something that cash flows massively, etc. just find a good property where your money will generate a decent income. (Should be able to cash flow 60k/yr easy) 

Good luck 

Originally posted by @Manik Sewak :

Lets say you have a million bucks and looking for a Multi Family to invest in. Where do you start? Do you consider many cities and look for the best purchase, or focus on specific area that you know well and settle for the best deal there. When you find one you like, what steps do you take from there? What gets you to the point of actually getting on a flight to see it in person? looking for some rules/guidelines here. Thanks!

 Start in your backyard.

It's better to be close to your investments specially in the beginning, specially if you INTEND TO ACTIVELY MANAGE the apartment building.

Now, if your intention is PASSIVELY invest, the location matters but what matters MOST is the SPONSOR you're going to invest with.

@Manik Sewak first a word of caution. Advertising you have a million dollars to invest will attract many people to give you advice, not all of which have your best interest in mind.  Make sure you properly vet anyone you meet on BP or in real life.

I am a huge advocate of investing close to where you live. It doesn't mean you need to self manage, but being able to drive by and put eyes on your investment has huge value.

The key to location is employment. Look for places with low unemployment and diversity in their employee base. For example if you are investing in a city that has one manufacturing plant as the main employer, what happens if it closes? Look for recession proof industries, which can include things like medical and education. Look at population growth and business climate of the location. High tax or tenant friendly states can be more difficult to invest in.