Do you have a large multifamily 40-100 doors?

Question

I'm geting ready to purchacse our 1st large multifamily, and am looking to purchase a minimum of 40, max of 100 units.  We currently have 21 doors, consisting of 2 commercial (auto repair), 2 6-plex, and 5 SFU, in 3 states.

Do you own large multifamily?

Did you use a Mortgage Broaker?

Do you own properties in multiple states?

Do you manage the properties yourself?

If you have a 3rd party PM do they use a trust account or do you write the checks and pay the bills?

Jeffrey Donis · Answer

Hey Gary! Great to hear you are getting started in multifamily. Here are some resources that helped me out a lot-

Best Ever Real Estate Syndication Book by Joe Fairless

ABCs of REI by Ken McElroy

Podcasts: Thinkmultifamily

The Real Estate Monopoly Podcast (mine)

Michael Blank's Apartment Investing

Multifamily Launchpad

Multifamily Wealth Podcast

Best of luck!

Gary Woodring · Answer

@Percy N.  Thanks!

Gary Woodring · Answer

@Chris Levarek, thanks!

Gary Woodring · Answer

@Jeffrey Donis, thanks!

Gary Woodring · Answer

@John Warren, I'm selling a couple and doing a 1031x.  We will be incuring bebt.

Our PM's do have trust accounts but am currently running 50% on the good PM's vs the bad PM's.  This has led me to believe that I am not committing or placing good checks and ballances in place.

Percy N. · Answer

@Gary Woodring,

Do you own large multifamily?

Yes, 1,000+ units. Smallest is 88 units, largest 390.

Did you use a Mortgage Broaker?

Yes, we have used a mortgage broker. Typically, they will charge 1% of the loan amount.

Do you own properties in multiple states?

Yes, 3 states currently, though majority of the properties are in one geographic area to help with economies of scale.

Do you manage the properties yourself?

We started with 3rd party mgt, but nobody is going to care about your properties as you do, so we are bringing it in house.

If you have a 3rd party PM do they use a trust account or do you write the checks and pay the bills?

Most PM on larger properties will open an account with them as custodians. PM would enter invoices into the PM software, we used to review the larger bills to be paid every week and they would cut the checks, etc.

Chris Levarek · Answer

Hi @Gary Woodring Are you purchasing with partners? What are your long term goals? Good question to start with as most of the questions depend on if you want to spend time managing or playing multiple roles in the acquisition. I suggest focusing on the area you want to grow in or that best supports your long term goal. The bigger you go, the more clearly you need partnerships.

Do you own large multifamily? Yes we are in around 600+ units.

Did you use a Mortgage Broaker? Yes. Or, our partnership network uses Mortgage Brokers and we find deals through partners.

Do you own properties in multiple states? Yes, Ohio, Florida, Texas, North Carolina.

Do you manage the properties yourself? No. This does not benefit our long term goals at this time and we choose experts in these areas so we can focus on our strengths.

If you have a 3rd party PM do they use a trust account or do you write the checks and pay the bills? Depends. Smaller assets, mixed. However larger assets, Our partner PM's or asset management teams coordinate all the bills.

John Warren · Answer

@Gary Woodring if you are buying a larger deal, I would explore using agency debt. I have a guy with Walker and Dunlop that has done an amazing job for me. The loan size has to be over 1 million, which should be easy to do with 40 units or more in most markets.

I used to own in multiple states, but ended up shifting everything back to the Chicago suburbs near where I live. This has helped me quite a bit in terms of management. I also have explored using 3rd party companies, but ended up insourcing management.

The trust account question is a very good one. I feel like that is not brought up enough by owners who are considering management. Any good management company should be set up that way for sure and then the owner's distribution should flow from the trust account to your at the building level.

Do you have a large multifamily 40-100 doors?

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