So I am posing this question to BP Nation, specially the newbie landlords here.
What is the ONE question you want to ask a Millionaire Landlord?
or you can ask more than one question.
It's up to you.
I will answer them all.
If I don't know the answer, I will honestly tell you and find someone who has the answers. For even though I have acquired over 1,000 units, I don't know everything there is to know about being a landlord.
Of course other millionaire (or soon to be millionaire) landlords can answer too.
1. Praise God that is awesome and congratulations !
2. How many units do you need to have for it to get easier 😜
Hi Robert,
The number of units for it to become easier - I am assuming, you mean or your assumption is buying more units gives you more time. The answer is "it depends" (isn't it always). If you buy the wrong kind of rental properties with the wrong tenants in the wrong area, buying more units actually means more hassles, more headaches, more work and LESS time.
Now, if you do it right, I like MULTI FAMILY more than singles. Here are the reasons why:
1. With MF, specially when you go with 50+ units, you can hire a full time maintenance manager and a leasing manager who, both can be over-seen by a property manager. It becomes a whole lot easier at this level because you don't have to deal with the tenant-drama as much, specially if the property is in a B/C+ area.
2. Buy C properties in B areas and then renovate them. Focus on brick with pitched roofs. There will be less maintenance over the long term if you renovate the property correctly. A MF obviously will have repairs and maintenance spread out over many units and you don't have to run all over town to service them (or have your maintenance guy service them).
Awesome questions and there's no penalty for asking more than one. Here are the answers:
I have been investing for several years (starting with a 2 unit and moved my way up) before I had the courage to do the deal.
I would never have done it as my first deal - that deal would have bankrupted me because I didn't have the experience, skill set and the team to pull it off.
How did I find my teammates?
Through the old fashioned way (but still very effective) of networking and asking for referrals. BP has made it much easier so I am super excited about the many people I am meeting here.
I am trying to rack my brain if there's ONE thing that is responsible for me going from singles and small multi's to having acquired over 1,000 units. And you know what? There is not one thing.
It's a combination of things.
Here are what I can think of:
1. Experience - I made so many mistakes it's embarrassing but I learned from each one. Document what you learn so that when a similar situation arises, you know what to do and you become more efficient. More importantly, your teammates know what to do because you've communicated what you learn (and it's hard to communicate something you don't document). Documenting what you learn is how BUSINESS SYSTEMS are built.
2. Team - I am blessed with great property managers, real estate agents, contractors and I found the best business partner I could. I surround myself with people smarter than myself (that's not difficult to do - LOL)
3. Capital - you may have years of experience and you may have the best team but if you don't have capital, you cannot scale. As the CEO of my real estate investment business, I am the primary person raising the capital to allow us to scale even more. Not only that, I build RELATIONSHIPS with my investors and private lenders. They feel good and secure with their investments with me and that comes with continuous communication specially when times are not good. You got to be willing to make those tough conversations. And of course, you got to follow through and do the work to make those investments that your investors and lenders invested in WORK. Otherwise, you'll lose those valuable relationships - relationships you really can't afford to lose.
Did you have to put up collateral to convince your investors to invest money in your million dollar project?
Nick,
Yes. The private money I got is in the form of debt. One investor got a first mortgage lien on the property while the smaller investor got a 2nd mortgage lien.
You got to make your investors and lenders secure and what's nice about real estate is - once you find an awesome deal, it's not that hard to attract investors and lenders. What makes people struggle is they find mediocre deals and it's hard to get investors with sub par deals.
The numbers got to work - there got to be a HUGE profit upside and then secure your investors the property you're buying.
Thanks for the answer, that sounds similar to my last deal I did. The house's appraisal value was twice the amount of the loan. The owner financed 20k, loan was for 85k. My partner and I brought 2k to the closing table.
@Michael Ealy congratulation on your success...!! I have a few questions, but feel free to answer any question that you may think is appropriate
1) With that many units, what is the cash flow on your end after paying your investors?
2) You mentioned you started out owning 2-unit, when/after how many years did you begin buying bigger unit (how many unit is your first big unit)?
3) Where are all units located?
4) I am assuming you are using some sort of commercial lending. What is your typical term from whom?
5) What is your partnership structure for each deal? I am assuming you are doing some sort of syndication.
Thank you for sharing....
Hi Chan,
Here are the answers to your questions:
1. How much is my cashflow after paying the investors - we typically borrow money from private lenders at 8-12% interest only so you can work the math from there.
2. How many years before I did a big MF - My first “big unit” was 28 unit then I advanced to 97 units plus at a time. I did not move fast but it was 4-5years after the 2 fam that I did a the 28 unit
3. Where are all the units located - mostly in Cincinnati and the midwest region
4. Use commercial lending - actually, I don't. I use all-cash to acquire properties.
5. Partnership structure for each deal - Partnership varies from project to project. Quite frankly when you start a partnership you are starting a marriage. So even though you only plan for a a 3-5 year term it can go longer. The old saying is happy wife .... happy life. But I believe in everyone being happy. Therefore think of the bad times/ worst case scenarios and if you can make it thru that... then partner up.
@Michael Ealy Kudos on your deal, that story and how you accomplished it is amazing!
I'm just starting out in the Cincinnati area. I just got an off the market deal, mainly a triplex, brought to me in Price Hill and it appears the numbers work out.
The questions I have:
1. Do you have any experience in the Price Hill area & if so, what has your experience been like with tenants and the dealing in the area itself?
2. What are some tools, apps, and/or websites that you use and find absolutely incredible?
3. Do you currently attend any REI meetups around the area?
Much appreciation for taking the time to answer mine and everyone's questions!
@Michael Ealy Kudos on your deal, that story and how you accomplished it is amazing!
I'm just starting out in the Cincinnati area. I just got an off the market deal, mainly a triplex, brought to me in Price Hill and it appears the numbers work out.
The questions I have:
1. Do you have any experience in the Price Hill area & if so, what has your experience been like with tenants and the dealing in the area itself?
2. What are some tools, apps, and/or websites that you use and find absolutely incredible?
3. Do you currently attend any REI meetups around the area?
Much appreciation for taking the time to answer mine and everyone's questions!
Sorry Andre, I totally missed this and didn't see it until now.
1. YES. I love Price Hill
2. gosection8.com is one of the websites - you can find owners who want to sell and buyers who want to buy more section 8 properties
3. Cincinnati REIA - but I am so busy nowadays so I don't make it to every meeting
Great work. Since you started small, do you have a formula for an offering price like the 70% rule I hear so much for wholesalers/flippers?
Les, NO - the 70% rule does not really work for rental properties specially multi family.
You got to know how to evaluate what a multifamily apartment building is worth and offer below that based on the return you want to make with the work you need to do, proportionate to the risk you take.
It also depends on the market you're buying. I can pay more for an A and B area but lesser for a C & D area.
@Michael Ealy Congrats! Reading about other's success is motivating and inspiring.
My Questions:
What did you have that was the turning point for you to turn your attention from SFH and small MF to bigger commercial buildings?
Is there anyway that someone like me; hungry, driven, and motivated to become successful in REI, can provide value to you and learn under your wings?
Hi Heshel,
For me, I know what I want to do LONG TERM and that is to be in the multi family game. So I started with a 2-family and work my way up. I became bankrupt but vowed never to be in that situation again. So my drive to hustle and work hard was there and still is. Bankruptcy made me HUMBLE and HUNGRY. I can't go back there and have my family suffer.
I will send you a PM Heshel. I don't know the answer to your question. I don't mentor people - I am not a guru and I am busy enough as it is raising money for deals and overseeing the empire me and my partner has built.