New Goal: Purchase 400 units this year

New Goal: Purchase 400 units this year

Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes

Hey all, 

My brother and I own and operate a small property management and construction company in Portland, Oregon.  We've been in business about 5 years.  We are also a licensed plumbing company and a licensed contractors.  We own a brewpub with 2 locations as well.  We have a lot of irons in the fire.

After reading "the one thing" and watching a few webinars, I realized that most of the effort I am putting into our real estate business is scattered.  I run payroll for all my companies, I do the taxes for all my companies, I handle 80% of the book keeping as well.  It's a lot of work.  Time to focus on one thing I can do such that by doing it, everything else will be easier or unnecessary.

I wanted to invite you all to join me on our journey of commercial real estate investment in the Portland Metro Area.  My brother and I have decided to take on a financial freedom goal of earning $160,000 a month in passive income (working less than 10 hours a week each) by the end of 2016.  I will be doing posts 2x a month on our journey with updates.

To accomplish this goal I realize that we need to own, manage, and be the preferred contractor on 400 units by the end of 2016.   Right now we own 19 units, we manage about 80, and manage construction on those 80.

We have made an offer to purchase another 14 units 2 weeks ago and the owner of those units will let us know about that shortly.

We have secured a team of investors to move forward on any properties over 50 units that we deem a reasonable deal and we have about $500,000 in liquid funds for capital on those ventures.

I could use help in a few areas if you guys have any advice.

  • First off, I am setting up our direct mail campaign in the metro area and other desirable areas.  I plan to hit it pretty hard with a list of about 800 apartment owners.  I am thinking about starting off with a postcard and a newspaper ad and AM radio spots.  I think that hits our target market of older apartment owners who are ready to let someone else either purchase the complex or let a management company manage it. We will be aggressively marketing to these owners with a mailing every three weeks until the Christmas holidays.
  • I will also be working on networking with property managers, accountants, lawyers, and commercial real estate brokers.  Any tips here would be great.  We are currently involved with IREM, NARPM, Letip, and ULI.
  • Another thing I need to dial in for when the right deal comes along is a joint venture agreement between our investors and us.  If anyone has an agreement or important items to include in that agreement I would be very grateful on advice there.
  • We also need to amend our property management contract to focus solely on multifamily.  Does anyone out there own a larger building and have a contract with a management company that they like or they thing is a good example?

Thank you in advance for all your help!  I am looking forward to hearing everyone's thoughts on the direction that we've chosen as well as other's experiences in similar ventures.

Cheers,

Chris Shepard

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Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
11y

@Chris Shepard I have to agree with @Brad Chandler and his marketing advice. 

Do you already have a list of 800 landlords?  If not, hopefully my marketing grunt work can help you out. 

I looked for lists of landlords, called list companies and could not find a good list.   All the lists only had class A monster apartment complexes owned by syndicates or private equity.  Not saying you don't want those, but you mentioned older owners looking to relinquish the day to day or the entire property.

So I created a list by having one of my assistants call the top 50 municipalities assessor offices in WI and ask for lists of 4 units or greater.  80% had them, of those, half were free, and the other half was $10 - $75. Every municipality had a different file/spreadsheet (after all, it is the government).  Once we combine the lists, removing duplicates, we researched the entities to get the phone #'s.

I have done a lot of cold calling and have had cold callers work for me over the last 20 years, and that list was one of the most responsive lists we ever used.  Hopefully this gives you some perspective when finalizing your marketing. 

Good luck and Ill be following along. 

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  • Robbie ReutzelBusiness Member
    Real Estate Broker · Shirley, MA · Member since 2014 · 305 posts · 211 votes
    11y

    Thanks Chris.

    Looking forward to seeing you progress!

  • Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes
    11y

    Very interesting. I'm looking forward to your updates.

  • Real Estate Broker · Portland, OR · Member since 2014 · 292 posts · 114 votes
    11y

    Way to go Chris! Hit em hard and keep those updates coming!

  • Wholesaler And Coach · Springfield, VA · Member since 2011 · 169 posts · 75 votes
    11y

    Chris:

    Apartment owners are typically more sophisticated than homeowners so be prepared that deals may be a bit harder to come by. What you are looking for is extremely targeted - b/c of that I would not recommend radio or newspaper - this coming from a guy who has spent close to $10M on TV ads in the past 12 years. Stick with direct mail, phone calls and even door knocking (if you find a deal that you think may be a big winner). Good luck with your goals!

  • Real Estate Broker · Manchester, NH · Member since 2014 · 630 posts · 420 votes
    11y

    Awesome to hear @Chris Shepard!  The One Thing was a fantastic book and I seem to be asking myself that question every day to make everything else easier or unnecessary :).  Best of luck with your goal!  Making it public this will certainly keep you accountable, so you'll have some of us other members cracking the whip to make sure you reach it!

  • Investor · Morrisville, NC · Member since 2012 · 1k+ posts · 673 votes
    11y

    Great goal @Chris Shepard. I wish you the best and look forward to reading about your progress.

  • Rental Property Investor · Mineola, NY · Member since 2014 · 838 posts · 212 votes
    11y

    @Chris Shepard Love the focus, determination, and plan to accomplish what you want. I look forward to the updates.

  • Flipper/Rehabber · Mobile, AL · Member since 2015 · 140 posts · 18 votes
    11y

    Good luck! Would love to hear more.

  • Investor · White Lake, MI · Member since 2013 · 165 posts · 41 votes
    11y

    Good luck, @Chris Shepard!  Very motivating goals and plans!

  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Chris Shepard I have to agree with @Brad Chandler and his marketing advice. 

    Do you already have a list of 800 landlords?  If not, hopefully my marketing grunt work can help you out. 

    I looked for lists of landlords, called list companies and could not find a good list.   All the lists only had class A monster apartment complexes owned by syndicates or private equity.  Not saying you don't want those, but you mentioned older owners looking to relinquish the day to day or the entire property.

    So I created a list by having one of my assistants call the top 50 municipalities assessor offices in WI and ask for lists of 4 units or greater.  80% had them, of those, half were free, and the other half was $10 - $75. Every municipality had a different file/spreadsheet (after all, it is the government).  Once we combine the lists, removing duplicates, we researched the entities to get the phone #'s.

    I have done a lot of cold calling and have had cold callers work for me over the last 20 years, and that list was one of the most responsive lists we ever used.  Hopefully this gives you some perspective when finalizing your marketing. 

    Good luck and Ill be following along. 

  • Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    11y

    @Chris Shepard, I love threads like this as I quit my CPA job and have bought and sold almost 1000 apartment units. Like you my real estate business was scattered until I got really clear on my "WHY".

    Please know that the multifamily business has challenge and the road ahead isn't always easy. I encourage you and your brother to get really focused on your "WHY".

    Why 400 units?

    Why $160k a month in passive income?

    You need to put a lot of emotion around your WHY and visualize what life will be like for you both, your family, your legacy, etc. 

    (No need to answer me back about your WHY, but the "WHY" is what will keep you going, what will keep you up late at night analyzing deals, will keep you going to speak to potential private money investors, will get you up early in the morning to make offers, to network with brokers, etc.)

    Your plan can be accomplished. But as stated already there is a lot of work ahead. 

    And if I can give you any motivation, you can listen to my Bigger Pockets Podcast - Click this link. 

    I share my WHY...Good luck my friend!!

  • Investor · Leesburg, VA · Member since 2015 · 54 posts · 19 votes
    11y

    @Chris Shepard Great goals, best of luck!

  • Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
    11y

    @Robbie Reutzel @Robert Laird @Chris Strokes @Brian Adams @Brad T. @Jason Bott @Jared Irby @John Cohen 

    Thank you all for the kind words.  I am really stoked to get moving on this journey.  I am in the process of hiring an assistant to manage all of our current properties, putting together the direct mail database, and preparing marketing materials to be mailed to apartment owners, using fiverr.com.  

    I've got our title company working on a list for us and I will be purchasing a list from listsource as well.  On top of that I will be driving for dollars, and I've got my local networking group giving me all the details on any apartment complexes they do business with or live near.

    Any suggestions on how to leverage my assistant or my networking group (70+ people) would be highly appreciated!

    I am also meeting up with Robert Laird @ Breakside Brewery today. If you haven't tried their beer, it's amazing... and that's coming from a brewery owner across town.

    Cheers!

  • Investor · Milford, CT · Member since 2015 · 200 posts · 69 votes
    11y

    How are you going to come up with the capital for the down payments on these? 

    In my area this would be around $60M +/- in property, and you would need $18m or $20m down to get the notes on them, plus capital reserves. Borrowing the money is fine but it dilutes your ownership significantly.

    I'd love to get into this league and now a couple guys in it, you just need such deep pockets.

  • Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
    11y

    If you have $160k a month in profits from your rents and ownership, there won't be a whole lot of passive going on, that's a massive number. The only way to get there is from owning multiple, 200+ unit apartment buildings. Those projects often take 2-3 years to build If you're buying them, in this expensive market, it'll take a while to find deals and get the units in the condition you want. You have a lofty goal and that's great, but that's a really big number for one year

  • Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
    11y

    @Chris Shepardthx for sharing your goals. Are you only focusing on the Portland area for your growth? 

  • Investor · Colorado Springs , CO · Member since 2013 · 77 posts · 22 votes
    11y
    Let's do it!! :) Come to the Springs when you are done!
  • Real Estate Broker · North Richland Hills, TX · Member since 2013 · 1k+ posts · 607 votes
    11y

    I thought the numbers seemed overly ambitious (to put it mildly) relative to their capital, but if big goals create massive action and generate great results, then they may have a positive purpose.

    I'd be happy w/ $160K/yr. in passive income - I'm over 1/2 way there, but it's going to take a lot more work and capital to go all the way!

  • Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
    11y
    Originally posted by @Chris Soignier:

    I thought the numbers seemed overly ambitious (to put it mildly) relative to their capital, but if big goals create massive action and generate great results, then they may have a positive purpose.

    I'd be happy w/ $160K/yr. in passive income - I'm over 1/2 way there, but it's going to take a lot more work and capital to go all the way!

     Best of luck Chris S (I'm Chris S too!!!).  I think the we are just going after different deals.  We are already past the 160k passive income point... The way that I plan to 10x our passive income is to use our construction company and our property management company to syndicate large deals (100+ units).  It is ambitious, but after being in real estate for almost 10 years, I think that going all in on a big goal is going to create the best results!

    Cheers!

  • Realtor · Milwaukee, WI · Member since 2014 · 147 posts · 73 votes
    11y

    @Chris Shepard

    Best of luck, I'll be cheering in your corner along the way with your updates. Your ambition is inspiring and am excited to see the momentum you build. 

    Best wishes!

  • Lawrence, KS · Member since 2015 · 45 posts · 4 votes
    11y

    Please keep us updated

  • Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
    11y

    Couple of quick updates.  Yesterday I had a fantastic conversation with  @John Cohen  .  He really knows his stuff and I expect him to be an invaluable resource and colleague during this journey. 

    On the direct mail front, I have thoroughly scrubbed a list from the title company.  So it's ready to go finally with about 1000 owners to reach out to.  All we need is our postcard to be ready and for the new cell phone dedicated to these leads to arrive.  Do you guys have any thoughts on call tracking and recording?  Is it worth it ($50/m)?  We have our CRM database setup on the cloud as well.  I'll let you know the success rate once we've launched it. 

    On the deal front, we've got a couple offers out there.  I've also got a couple commercial brokers on the look out for me in town. 

    One deal I am willing to share is an owner financed deal to pick up 14 houses on the same street that our management company already manages. The owner wants out of the day to day and we are in the process of reaching the right numbers. The houses all have a lot of deferred maintenance... 10 of them need roofs and 12 of them need about 15k in the interior ($250k to $300k in CapEx). The owner is looking for 350k in cash up front and wants to carry the rest amortized over 20 years, but she is willing to give an interest only loan while we make capital improvements. So if we have to dump 600k into this project, over the next 2 years, what type of cash on cash return should we be hoping to get? I'm thinking about 12%-15%. This whole deal really depends on the interest rate that we choose for the loan in my opinion...

    What are your guys' thoughts on a deal like this?  It is a small step on the goal to 400 units, but it takes a pretty massive chunk out of our capital.  We could obviously syndicate it or sell pieces of it after the fact when something better came along.  

    Only owning 22 units currently, I would normally jump on this deal in a heartbeat.  But knowing my goal and the opportunity cost of choosing smaller deals is weighing on me. 

    Cheers!

  • Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    11y

    Good luck on your quest

  • Rental Property Investor · Mineola, NY · Member since 2014 · 838 posts · 212 votes
    11y

    @Chris Shepard Go get em!!

  • Investor · Portland, OR · Member since 2012 · 163 posts · 121 votes
    11y

    Made another offer that I will syndicate to some friends on a 5 plex on 4 lots today as well.  Lots of stuff going on. 

    I've got an excel question.  How does everyone format the names on their lists for mailing?

    I have tons of businesses, trusts, and individuals I want to mail, but their names are all not perfect and ready to mail.  There's about 1500 people on the list... Is it really worth it to go through each one personally?  Do you guys outsource?  Does anyone have a program that does it automatically?

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