Finding partner(s) for apartment investing

23 Replies

Hello BP family,

I'm an overseas American looking to jump into RE investing.

I am currently considering two strategies.. Either turnkey sfh investing or apartment complex investing .. I'm investing for cash flow ( goal of $3000 month net for myself) and through my research have yet to find a better cash cow than commercial mf ..even the lukewarm deals there cash flow better than turnkey sfh's

I have been in talks with brokers and have seen some decent deals on the MLS but have struggled to find reasonable financing because I have 0 investing experience.

Anyone have advice on how to find a willing and experienced partner who can be my boots on the ground and mentor on the journey? I can provide the bulk of the capital while partner finds the deal, guarantees the loan, etc.

@E Ibrahim

I would start by networking in the markets you want to invest in. You can do that either through targeted BiggerPockets forums, joining local meet-ups, or finding a mastermind group. Personally, I joined a mastermind group and have had several opportunities to partner. Be transparent and tell people, just like you are doing, what you are looking for. 

Sincerely, 

Josh 

@E Ibrahim

Great question, happy to see you are researching and evaluating your options.

I believe part of the answer lies in to what degree to do want to be involved in the management of these investments? Even “turn key” rentals will require some direct involvement. Passive investments in multifamily syndications will require even less of your time and might provide greater cash flow.

I have invested in 7 MF syndications as a LP and am a GP in 3 MF syndications.

Based on these experiences, I believe one can plan to receive a 7% to 8% annual cash on cash return plus some additional upside upon sale of the asset in 5 to 7 years.

At these typical cash returns provided by MF syndications, you would need to invest about $500,000 to achieve a $3,000 a month cash flow.

Hope this helps with your investigation. 

@Joshua McMillion     Thanks for the tip Josh! I never considered joining a mastermind, though I've often heard them come up during my research. Accountability is great thing. Will be looking into it now.

@Arn Cenedella Thanks for the input Arn. I wouldn't mind being a more active investor, but given distance, a more passive investment is better for me. I was drawn to partnering as I can be part of the deal with training wheels on, but still retain equity and have some say over selling or 1031 exchanging in future, all the while learning along the way. 

Your numbers are exactly what I have found when investing syndications, and as you noted, bigger pockets are needed to get the cash flow I'd like (pun intended :P).

Tough to get good cash flow with turnkey. Multifamily in secondary and tertiary markets is the way to go for cash flow. Do you have any specific markets in mind? Are you looking to be an active or a passive investor. 

Updated 19 days ago

Saw your interested in passive. Look for Sponsors who invest in cash flow markets (typically these will be outside of major MSAs)

I agree with @Joshua McMillion . If you network with people and find a way to bring them value, likely by bringing them a good deal, there will be someone willing to do a deal with you. What we did was pay for mentorship with a syndicator who will partner with us on deals, so that might be a good option too. 

@Aj Parikh

Unfortunately, my mastermind group is for only active military members and veterans. The group is called the War Room, sorry. 

Sincerely, 

Josh

Network. Attend as many meetups as you can and speak about what you are interested in. Events can be found by going to

https://www.biggerpockets.com/... where you can pick and choose from events like this

Inevitably, you will meet someone else in the area or interested in a similar topic. Connect and see where it goes.

In my experience, if you want to get into apartment investing. Three main roads to success : 

  1. Go active and build your portfolio, increasing size of multifamily deal every time. Partner. Build a Business.
  2. Go passive and invest into an apartment syndication. Form a relationship with the sponsor team. Let them know you want to learn. Get involved.
  3. Buy a mentorship or learning program with a vetted, successful syndication group. Access to network and knowledge allow you to accelerate goals.

@E Ibrahim you will always get people's attention when you say you can bring the bulk of the capital or be a loan guarantor. You can go the JV (joint venture) route or passively invest in syndications and leverage the operators' knowledge of the market and their network.

Explore some online meetups in the markets you are interested in, and you can locate some boots-on-the-ground JV partners. If you resonate with someone in the group, set up a Zoom meeting with that person or people to dive deeper.
Conversely, you can set up calls with sponsors to see if your interests align with their's and if they are active in the markets you have an interest in.

The cost of syndication alone can take a bite out of returns, but annualized returns for the LPs (limited partners), can hover around 20% when you combine cash flows and disposition. Not too shabby.

Since you remove the cost of syndicating with a JV, returns can be higher, but consider the work involved. If you are a partner in a Joint Venture, you must bring more than just the money. You need to be actively engaged.

Thanks everyone for your feedback. You have given some really solid suggestions and feedback.

I'm pretty intrigued by the paid mentorship model (where mentor becomes a partner). Seems like great way to get educated, and also have someone experienced by your side with skin in the game and every incentive to ensure the success of the student.

Ya it sounds like you're talking about active investing in apartments. That's ambitious for sure. I myself have settled into the passive or limited partner type of apartment investing. And a little bit of debt investing, but also passive. It's just easier. I am content with 8-10% for debt and 12-14% for apartments/equity. If you require more than that, and want to work hard and take more risk, then active is your ticket. If you can work your way into passive investing, though, that's what you call "mailbox money" or "building wealth slowly and carefully." 

Hey @E Ibrahim That sounds like a great plan. The challenges you will have is finding someone you can trust remotely. 

I know you have spoken with lenders already. I just want to point out that if you have the capital you are able to purchase properties while out of the country. Lots of financing options exist to qualify by yourself on these properties. 

Good Luck!

@Jason Merchey Yes, exactly..my idea is more on the active side when I really think about it....being remote makes it really difficult to build that trust with a partner or partners. I managed to find a company that does commercial multi-family turnkeys, but they're all out of inventory.

@Jason Shackleton I feel there are options to qualify somewhere out there, but without Landlording experience and a loan guarantor I have not been able to find any interested financiers. If you happen to know of any lenders that could do so on somewhat favorable terms, let me know! 


Here's a near foolproof plan.  No one will do it though because it takes work.  Listen to about 300-400 podcast episodes dealing with the areas you want to invest (you can do keyword search on podcast episodes titles to find geoniched podcast content).  About 20% of those episodes will end up where the guest drops their email and or cell.  Call (don't email) the guest.  Ask if they would be willing to be your boots on the ground. After 90 days of hard core work, 50 phone calls, and 25 conversations, you'll have your BOTG [Boots On The Ground].

Originally posted by @E Ibrahim :

@Mike Lorence great suggestion, I love that

 

Keep networking on Biggerpockets! Virtual meetups are more and more popular. Find some virtual meetups in the markets you are interested in and attend those. 

Also, I have had great success meeting people on different Facebook groups.