Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
@Patrick Flanagan I landed my first multifamily deal through persistence and hard work. It was my first real estate investment, but I had 14 years of experience working for a commercial real estate investor, so I was well versed in it. I had multiple partners because I went the syndication route.
For you, your path might be different. The first questions that I'd ask myself if I was in your shoes would be as follows.
1. What is my level of expertise with multifamily?
2. What is my personal risk tolerance?
3. How much money do I have access to? This can be your own money or other people's money.
Then from there, we can help determine which path might be best for you.
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
@Patrick Flanagan I landed my first multifamily deal through persistence and hard work. It was my first real estate investment, but I had 14 years of experience working for a commercial real estate investor, so I was well versed in it. I had multiple partners because I went the syndication route.
For you, your path might be different. The first questions that I'd ask myself if I was in your shoes would be as follows.
1. What is my level of expertise with multifamily?
2. What is my personal risk tolerance?
3. How much money do I have access to? This can be your own money or other people's money.
Then from there, we can help determine which path might be best for you.
Property Manager · Prineville, OR · Member since 2016 · 261 posts · 166 votes
5y
@Charles Seaman
I own a 4 plex right outside of Portland, OR. I’m looking to buy another out of state.
I’ve read several books on buying apartment buildings, had lunch and know several people that own lots of apartments. So I understand value add, how to lower expenses to Increase your roi, Increase the value of the property and refi your money out. I could sit in on a meeting talking about apartments and understand what everyone is saying But by no means could I go purchase a property on my own right now.
I do have good pile of cash reserves they keeps growing.
I’m just not “accredited” so it’s hard to get people to understand how serious I am or my actual knowledge on buying a apartment building.
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
Got it. Being an accredited investor (or not) shouldn't be a major deterrent. I'm not an accredited investor yet and I'm currently involved in three (3) multifamily syndication deals. What are you hoping to achieve through multifamily investing? Do you want steady cash flow or are you hoping to build a large scale business from it?
Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
5y
I agree with @Charles Seaman. Self-awareness is crucial in knowing how you want to proceed with investing. Once you know your strengths and weaknesses, you can leverage them to find someone who compliments your needs that you can bring value to. Real estate is a people business!
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
Got it. With that purpose in mind @Patrick Flanagan, you're likely better off buying smaller multifamily properties that will bring you steady cash flow each month. If you have enough capital to acquire them without a partner, then I personally wouldn't have a partner. Just make sure that you have a good property management company in mind, unless you plan to manage them yourself (this will start to become another job as you add on more units, so it's probably not going to help you achieve the desired result of time freedom).
Another option is to passively invest in syndication deals, as this is probably the most passive you can be in real estate. The biggest downside to it is that you're giving up any control you have over the deal, but many people like this approach.
If you're buying multifamily properties with 2-4 units, then they'll be looked at from a residential standpoint by lenders, meaning that their value will largely be determined by comps. If you're buying multifamily properties with 5 units or more, then they'll be looked at from a commercial standpoint by lenders, meaning that their value will largely be determined by the property's NOI and financial performance.
Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
5y
@Carla J Brand then I'd recommend going active on the syndication side. There will be a lot more earned income than passive income with that approach, but the rewards can be plentiful if you stick with it and build it out. It'll start slow, but it will eventually allow you to do bigger deals than you could do by yourself. There's also a lot of responsibility that comes with it because you'll be managing other people's money, so it's not for everybody.
Investor · New York & TN · Member since 2019 · 325 posts · 219 votes
5y
I bought a 21 unit 5 story walk-up apartment bldg (mid 90's).
I used to do a lot of intercom repairs and installations in apartment bldgs, and in doing so I met a lot of landlords. I realized that many of them were no smarter than me nor did they have any special college degrees, but they all seemed to be doing very well financially. So I decided that I would jump on an opportunity when it presented itself.
When we were in contract, my wife said to me "you can teach me to manage the bldg so you wont have to". She was thinking that she would take this responsibility from me so I can keep doing what I was doing. I looked at her and said "That's a great idea honey, but who's going to teach me?"
I'm not entirely sure why, but I never had second thoughts or fears in doing so. Needless to say, I figured it out and I was right, it wasn't that difficult.
Developer · Atlanta, GA · Member since 2020 · 11 posts · 6 votes
5y
@Patrick Flanagan I would buy in Atlanta because the market is hot and there's where I live at the current moment. But, of the numbers make sense and you can make a significant profit, it's a win win!
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
5y
My wife and I had onesies and twosies for a really long time in California; and then duplexes in the Olympia Wa area as OOS investments. About four years ago I began looking for something bigger and along came this twelve unit building. It was on the MLS I went out walked the dog through the neighborhood, and hung out near the garage, and soon this nice lady came along and parked her car in her garage, I walked over and asked if I could talk to her about her experience in the building. We chatted for a bit and all of a sudden she said "are you going to buy the building"? We both laughed and I responded with a maybe and thanked her for helping me out. If she represented the tenant pool I wanted the place.
We made an offer-cash at asking-if the inspection of paperwork and property worked out. It did, the place was very promising, the numbers were good and the LL was retiring. We developed a punch list of things to be done, deposits and prepaid rent owed to me at closing etc. The seller is a great guy and I can still call him 4 years later.
Before closing I was calling PM companies to interview when my wife said she felt she could handle it-and I knew she could. We had a PM for some other properties in the area, we let the PM go and my wife took those over as well. For extra support we joined a local LL organization and started going to meetings. My wife had retired early from her career in California and had the drive to get the PM job under control.
The apartment has turned out to be a gem; today it is producing so much more income than it was at purchase; yes taxes, insurance and water etc are all way up but the rents easily make up for the increased expenses. You have to keep rents at market or you can fall behind and worse. Even at only 12 units the leverage of having all those doors under one roof is noticeable.
Develop the ability to analyze properties, and If an opportunity comes along that it is a deal, be ready to act!
Rental Property Investor · Rochester, MN · Member since 2017 · 224 posts · 323 votes
5y
@Patrick Flanagan
I was looking on loopnet and found something the piqued my interest. I was talking about it with my dad (not a real estate guy) and he said “call up my buddy “Greg”, he’s got lots of apartments”. So I call up this buddy to run the deal by him and get some insight. That conversation gave me enough confidence to make an offer on the loopnet deal. I didn’t get the deal, but I called Greg back and thanked him for helping me gain confidence and make the offer. During that phone call he asked me if I was interested in his 12 unit he was going to sell soon. Bada bing, here we are. I had zero experience. Just a family friend that treated me right and gave me confidence to get started
Rental Property Investor · San Ramon, CA · Member since 2017 · 350 posts · 611 votes
5y
Had about 15 years of experience managing my own commercial-industrial property but 3 years ago, decided to grow my portfolio. Read up on BP, watched youtube on REI every chance I got and practiced underwriting. Found a 16 unit about an hour away from where I lived (California) on the MLS, partnered up with a former co-worker and dived in head first. Was fully rehabbed by the seller inside/out but completely vacant. Negotiated 10% down, 15% seller carry and 75% private/hard money loan. Was terrified and excited when we closed escrow. Bought for $1.3M. Everyone thought I was crazy for taking the leap.
Brought on professional management, leased it up with great tenants at market rents within 4 months. Sold for $2M 12 months later for a nice gain. 2 years later and 500+ units, my only regret was that I didn't go bigger sooner!
Rental Property Investor · KY · Member since 2018 · 25 posts · 33 votes
5y
@Patrick Flanagan
I got mine after it was on the market for over 150+ days and it needed about $180k in repairs that no one else wanted to touch. First day of owning it I had to put people in a hotels to start flipping it. I am SO happy and so proud of my building now. It’s been worth it to me. I’ll be holding it for years to come. People ask me how in the world I found it. Well, it was there in plain view.
Rental Property Investor · KY · Member since 2018 · 25 posts · 33 votes
5y
@Patrick Flanagan
My second one was a 95% vacant BEAUTIFUL and not too old 24 unit “Stay & play” on an abandoned/foreclosed golf course. Had to buy $40k in appliances, get rid of hotel style furniture, paint, and find tenants! 2 Bedroom/ 2 Bathroom Apartments now.
Went under contract on this right as Covid was first being talked about. Closed on it as we were going under lockdown. I also ended up having to go in for an emergency appendectomy, refusing to go into hospital because I didn’t want to get Covid just from being there.... Approaching mortgage. Ughhh..... Let’s just say.... SCARY TIMES. You just got to have a plan, wake up and kick ***, and think about what you need to do to make it happen.
I don’t know if you need to have a certain amount of years experience... experience does certainly help but being able to problem solve is pretty important and being able to plan stuff out on a bigger scale.
Investor · Tampa, FL · Member since 2021 · 27 posts · 29 votes
5y
My advice:
1. Find one or two mentors who can advise you.
2. Learn as much as you can about the numbers.
3. Look at as many deals as possible and go through the process of underwriting them. Even if th==you won't be buying them. That's how you learn.. You can't be too knowledgeable.
4. Find a partner if necessary. I started with a family member 23 years ago. I even borrowed my equity investment.
Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
5y
@Ken Gee I totally agree! Thanks for these points. Underwrite many deals just as practice. Every deal is different. I would also add focus on maybe 1 or 2 markets so that you can really get to know the area and build solid relationships with the brokers.