What Size of Property Should a Beginner Investor Start With

People will often ask us:

“What size deal should we begin with?”

It seems to be the focus of a lot of people. Some want to jump out the gate and do one hundred-units, whereas, others want to start with two-units or twenty-units, luckily for both groups, there's no wrong answer. We started with twos and threes and then jumped to one hundred units, that's what we felt we were prepared for and that's we went after. I've seen other people build quite a portfolio of quad-plexus and eight-plexus and grow that over time and I've seen other people just jump from the gate and immediately tackle 100-400 units.

when we first started we picked up two duplexes in Indiana and we did quite a bit of due diligence, like going out there once we knew that the deals were solid, we knew the investors personally and truth be told we were told by a lot of other investors not to invest in this area and these were key investors in our life and key mentors but we knew the investors that were more invested in the relationship and they allowed us to open up our minds to the possibility of not only doing multifamilies but also doing it out of state. Had we known that this idea was going to take root and we're going to go into multifamily it would have blown our minds were blown, of course, they were blown again when we realized we actually could do it. It all comes down to how comfortable you are and what kind of risk tolerance you have. You should also look at the team around you. If we are new to a space it's crucial to have a strong team.

Since we are now syndicating deals we have to make sure that we're in the most responsible position for our investors and for our investment criteria. You could start small or you could go large. We find that you gain more economies of scale if you go larger by being able to rely on anything from how your death service will be perceived to the management fees that will be involved.

However if mentally you're not across that barrier and you can't get across a twenty- unit or a fifty-unit then it's fine to start smaller, you can have a lot of success and learn a ton from starting smaller. There’s also a chance that in your mind you are taking on less risk, whereas, if you have a team in place, you've been building up your network, you've been building up your investor network, you have good funding in place, you have great Bank connections and you've been building up your team of property managers and brokers and then a one hundred-unit or two hundred-unit comes upon you, well, if you're mentally prepared and you have the team around you then you know you can excel and where you're your weak points are you have a team member that can jump into that space and help you across the finish line, then by all means I would I would go for the number that makes sense for you. Again that just depends on your how comfortable you are.