Advice on multi family investing through investor group

Member since 2020 · 6 posts · 2 votes

I want to invest in multi family apartments, but because I don’t have any experience I am thinking of joining an investor group. Are these groups groups worth my time and money?

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Moises R Cosme

Flipper/Rehabber · Leominster, MA · Member since 2020 · 667 posts · 384 votes

Key questions:

1. Who is the owner of the investor group? What is their background? What is their track record? It is important to evaluate the individual that heads the investor group.

2. What is the track record of the company? Where are they located? How many employees do they have? How long have they been in business? What do past investors have to say about them?

3. What is the investment? What are the numbers? What is the return on your equity? Do the projections line up with the realities of the market? Try to question their assumptions, particularly as it pertains to rent rates. Ask for profit and loss statements for the last 4 quarters (get them broken out by quarter) and see if you can match their results with their projections (for any project they have done). A good investor group will run separate P&L's for each investment and they should have a record of their projections as well.

4. Binders - ask if they will provide you with copies of the insurance binder on the subject property; they should be willing to provide you with a redacted version of the policy; approach the situation as if you are buying the building yourself!!

I hope this helps, if you have further questions check out my profile & feel free to message me.

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Moises R Cosme
Flipper/Rehabber · Leominster, MA · Member since 2020 · 667 posts · 384 votes
6y
Key questions:
1. Who is the owner of the investor group? What is their background? What is their track record? It is important to evaluate the individual that heads the investor group.
2. What is the track record of the company? Where are they located? How many employees do they have? How long have they been in business? What do past investors have to say about them?
3. What is the investment? What are the numbers? What is the return on your equity? Do the projections line up with the realities of the market? Try to question their assumptions, particularly as it pertains to rent rates. Ask for profit and loss statements for the last 4 quarters (get them broken out by quarter) and see if you can match their results with their projections (for any project they have done). A good investor group will run separate P&L's for each investment and they should have a record of their projections as well.
4. Binders - ask if they will provide you with copies of the insurance binder on the subject property; they should be willing to provide you with a redacted version of the policy; approach the situation as if you are buying the building yourself!!
I hope this helps, if you have further questions check out my profile & feel free to message me.
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Terry Lawson
OP
Member since 2020 · 6 posts · 2 votes
6y
This is very helpful information. Thank you so much. I will message you if I have more questions.
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Daniel McNulty
Financial Advisor · Indianapolis, IN · Member since 2018 · 294 posts · 165 votes
6y
@Terry Lawson

What investor group is charging you to learn? Most of the good ones I know of are free to join, network and learn. The only time you should have to use any money is when you are investing.

That being said, if you do not have experience in multi-family it could be very beneficial to have other experienced investors and operators around you. You or whoever you are investing with needs a strong, well documented process to evaluate the giant number of opportunities that will undoubtedly present themselves.

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
No. There are a million free investor groups that are just REI meetups all over the country. You want to learn more for free and not get stuck in a deal with a group that minimizes your control. If you want to learn about MF investing then learn and wait until you are ready to invest on your own. No one needs to pay for groups or coaching or mentoring until they are already doing business because there is so much great information available for free. Once you get going and you have the start of a business, then coaching and grouping makes more sense because you are less likely to have the wool pulled over your eyes. In general, don't pay anyone anything if you are new to real estate. Read books, hop in these forums, go to REI meetups, listen to podcasts, make friends with agents and investors, then DIY with free guidance.
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Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Terry Lawson, agreed you should not have to pay much, if anything, to meet local investors. Maybe a cup of coffee, or a couple dollars to offset the cost of the pizza, but I am talking couch change amounts of money.
Are you wanting to invest actively or passively? If active, once you can start attending meetups, I would do that. Most cities will have at least a couple real estate investing meetups, and many are held monthly. It is sparse now, but check out https://www.biggerpockets.com/forums/521-events-and-happenings or meetup.com and search "real estate" and your city. You will often find flippers, buy and hold single, small multi and some large multi investors at these. As well as wholesalers, realtors, sometimes finance people, etc.
If on the passive side or JV active, a lot of cities have investment clubs. These are groups that go into projects together as a JV, discuss passive deals and syndicators, etc. My understanding of these is they are often free too. If you are looking for passive, and are accredited, 506investorgroup.com is another good resource to help learn about opportunities, hear other's experiences with operators, etc.
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Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 560 posts · 463 votes
6y
@Terry Lawson Welcome to BP. I think you'll find everything you need to read up on your preferred real estate investment vehicle here.

In addition to what others have said, I'd recommend to underwrite several "groups" before pulling the trigger.
It will be a huge ROI on time invested if you can narrow it down to an operator that is aligned with your personal goals.

Further, investing passively can be a great vehicle towards financial freedom for busy professionals that have a high opportunity cost that they don't want to pay.

If you do have the time and bandwidth, then investing passively or working for an operator is still a great option to start with just like working for McDonald's can teach a great deal to anyone wanting to run their own burger joint.

Happy Hunting :)
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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
6y
Network with people, join Meet up groups and attend conferences. You can meet all of the syndication companies you need to know right here on BP. I wouldn't pay to be apart of a group.
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Justin Goodin
Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
6y
Originally posted by @Todd Dexheimer:
Network with people, join Meet up groups and attend conferences. You can meet all of the syndication companies you need to know right here on BP. I wouldn't pay to be apart of a group.

Todd aren’t you a mentor in Michael Blank’s coaching program?
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Greg Dickerson
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
6y
Originally posted by @Terry Lawson:
I want to invest in multi family apartments, but because I don’t have any experience I am thinking of joining an investor group. Are these groups groups worth my time and money?

Sounds like you want to invest passively in a syndication? If so you want to thoroughly vet the sponsor and the opportunity. They are not all created equal. Make sure to do your homework and have an attorney review the PPM and offering details.

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Ian IppolitoBusiness Member
Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes
6y
Originally posted by @Terry Lawson:
I want to invest in multi family apartments, but because I don’t have any experience I am thinking of joining an investor group. Are these groups groups worth my time and money?

Personally I think it depends.

A good investor club will be a place where a large number of people can share their knowledge and time to do due diligence and really knock hard on deals to make sure they are worthwhile to invest in. This can be invaluable, especially to you as a newbie investor.

On the other hand, there are also groups that exist simply to push deals. If you join a group like this you may end up worse than if you had not.

So I would recommend checking out the club first and making sure it's the former rather than the latter. See what kind of people there are in the club and how many there are. The more high quality people there are, the more benefit you will get. Is it a club where people are participating a lot (good), or is it mostly dead (bad). Etc. Are the people mostly investor newbies (very bad in my opinion) or are there at least some veterans who regularly participate (good)?

And I agree with what a few others said: you do not have to pay to join a good club. And if they require you to pay, then why would you do that versus going with another option.

Hope this helps.
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Jack Martin
Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes
6y
@Terry Lawson another method you might consider is to find an experienced mentor who is already doing what you would like to do. You may be required to work for very little for a period of time, but you will learn while doing deals, so it can be a faster way.
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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
6y
Originally posted by @Justin Goodin:
Originally posted by @Todd Dexheimer:
Network with people, join Meet up groups and attend conferences. You can meet all of the syndication companies you need to know right here on BP. I wouldn't pay to be apart of a group.

Todd aren’t you a mentor in Michael Blank’s coaching program?

I believe he's referring to being part of an investor club, which is not the same as mentoring. The coaching programs like Michael's are for people who want to be active multifamily investors and want a one-on-one coaching experience. A club is more like an organization. I wouldn't pay for such a group, either, unless it had a very, very compelling value proposition. @Ian Ippolito's post is more directed toward a club-type organization and the potential pitfalls there.

Michael's coaching program has such a value proposition for folks who want to actively invest. However for passive investors, it's not hard to seek out syndicators and get to know them.

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Ellie Perlman
Multifamily investor · Boston, MA · Member since 2017 · 281 posts · 521 votes
6y
@Terry Lawson Before making a decision, make sure you trust and like the sponsor. After all, s/he will become your partner for 3-5 years... I'd also add, that when you speak with a sponsor, ask them about their projections vs actuals on previous deals, and how their properties are performing during COVID. Combining your gut feeling (trust/like them) with some data on past and current COVID performance is a good mix... Good luck!
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