All Forum Posts by: David C.

@Gary Woodring  Holy cow!  That's awful.  Your points are well taken.  We had a few contractors try to pull a few fast ones on our SFHs when work was done (overordering and then walking with the extra materials).  Since we were the PMs, that was caught and stopped quickly.  So how have you vetted your PMs to avoid your issues at this point (what questions asked, how many references, etc?)  And would it be reasonable to do a "pay as you go" account that you could fund rather than having a nice juicy escrow account for them to "raid and run"?

Fellow BP-ers,

I have managed my own properties for years, however as we have increased our holdings and now entered multifamily units, we are now considering using a Property Manager.  Though we have vetted maintenance workers, cleaners, painters, etc. in the past as we built our "core team" and created systems for our properties, we have never used a PM before.  I have read many articles and met folks who have had mixed experiences with Property Managers.  

What have been the biggest blunders that have you been experienced either in the use of PMs, decisions made by PMs on your behalf and/or the "Things I wish I knew then" moments ?  Thanks!

@Ken Dunn  Your response was incredible - Extremely insightful, informative and thought provoking.  I really appreciate the personal experiences that you had as real life examples.  It's ironic that you mentioned the looking at various "rent raising scenarios".  That's actually what I am doing right now in my underwriting spreadsheet.  It's very interesting to see that most folks (if not all) view the MTM leases as a positive, not a negative.  I tend to underwrite conservatively (to avoid getting in a pickle), so seeing so many MTM leases just piqued my "Warning Will Robinson" alarm (We'll see how many get that reference)....

(Sorry for all the M's in the title)

Fellow BP-ers,

An OM crossed my desk which seemed promising, a 9 unit multifamily which had decent cashflow and the numbers would work at a slightly lower offering price.  However one thing stuck out like a sore thumb - 5 of the 9 units were on Month to Month leases.  

Interestingly though, two of these month to month tenants have been there for 6 years, and two have been there for 2-3 years.  I did note that these month to month tenants had been paying less rent than the long termers who have yearly leases for similar units.  As such, I am thinking that if the rent is raised to the proper rate on the month to month tenants(to align with the others), they may take off and destroy the cash flow.

That being said, I would put the question to you, of those who own multifamily properties, would this raise a red flag for you and what are your thoughts?

Dave

Outstanding insight and advice! I greatly appreciate the dive into alternatives to the typical Guru models that I tend to see everywhere now. This is not to say that there are not great mentors/coaches, but it is near impossible to tell one from another when everyone seems to make the same claims.

Though I absolutely believe that you get what you put into a program - However, when I researched certain programs, I found that the measure of success was squarely placed on the student laying out the big bucks.  So in theory, a motivated and dedicated student could enroll in a program that has pitiful resources, unreliable teaching and poor practices, but if the student was unsuccessful, it was singularly their fault.  Hmmm....that's convenient...

On a side note, I am a big fan of @Brian Burke 's book. That book and Fairless' syndication book are two of my all time favorites.

Thanks for all the advice - I really appreciate it.

Thanks so much for sharing that Ned.  For the good of the group, would you share examples of what you spent money on that you felt was a *waste* and what you felt was a *win*, as well as criterion that might be able to "weed out" those that are a waste? 

@Tommy Brant @Will Edwards & @Account Closed

Thanks for the great book suggestions and advice.  I absolutely agree with you regarding it being a team sport.  I have built a great team for my SFHs which include a great lender, several residential brokers, a real estate lawyer and maintenance folks.  Most of the true business learning for SFHs has been "on the job training for me", so I feel that I have a good skill set in that realm.

Switching to MFH just seems to me to be a bit of a "whole new ball of wax", and the rules change a bit.  There are so many more variables that I have come across and the stakes are higher.  That being said, there are still some rules that still apply.  Numbers don't lie, and cashflow and debt work much the same.

As for figuring out someone's role in MFH, I think this really depends upon the size of the property.

For a 2-20 unit deal: I would be the "deal hunter", Financer/Underwriter and property manager all in one.  

For a 25+ unit deal: I might be the "deal hunter", and partial financer (would find a partner) but likely would not be managing.

For a 50-100 unit deal:   I would need either multiple partners or be a GP/LP in a syndication. So that changes things quite a bit.

I think you stretched my brain to come up with this as a possible answer, "Adapt as you go and be prepared to wear different hats for different situations, depending upon the size/makeup of the deal."  

And your points are spot on - Networking and team building.  Finding that team is the challenge.  Of course, quality resources(books/materials) to educate and sharpen your skills is key.

I have watched many BP podcasts, but BP Podcast #416 blew my mind as to how fast the guest (Matt Onofrio) learned/scaled, but also the concept of adopting a particular mindset.  Both @Brandon Turner and Matt spoke about how if they "lost everything they had", they would jump back in just where they left off and not start from the beginning.  

I would ask those who have adopted this confident/unwavering mindset, what helped you overcome obstacles and the "I can't get to that level" thinking?  Experience?  A mentor?  or something else?  

The simple answer I come up with is the Henry Ford quote of "If you think you can or you think you can't - you're right".  

Could others share their own experiences of if/when they had the "How in the world do I get there?" moments of doubt - and how to rise above this.

Hey everyone,

I have read several multifamily books/resources and am still looking for more to read.  In my experience, many of the books had I ordered/read were very simplistic and skeletal (not much meat and potatoes in them).  Finding new books on the subject that drill down deep has been very difficult, because most of the new books that I have seen are just re-hashing the same books that are out there.  I know that @Brandon Turner just put a two volume set on the subject, but haven't really seen many reviews.  I didn't know if these were more for beginners or not (please take no offense Brandon - I think you, and your beard are great!)

Some of the best I have read are:

- The Hands Off Investor - Brian Burke

- The Best Ever Apartment Syndication Book - Fairless and Hicks

(I realize that the above books are heavily weighted in syndication, but feel these contain valuable information that does apply to MFHs)

So I ask the group, what books about multifamily investing have you read that have made a day to day impact on how you have acquired, financed and/or managed your multifamily properties?  Thanks!

Disclaimer: I have no financial ties to the books listed above.  I'm just an "ordinary joe" :)

@Percy N.  Agreed.  I learned a great deal managing my own properties for the past 10 years.  My wife and I refer to it as "The good, the bad and the ugly".  Thankfully we have experienced far more good than bad or ugly.  Both financially and tenant-wise.

For me the issue I am wrestling with is scaling up in the most time/cost efficient manner.  I can continue to keep replicating a stable model (with my SFHs) and proceed until I hit my "magic number", or I can break out into a new model and attempt this in MFH (which in my mind is more likely to provide me with greater chance of reaching my goals of greater cashflow and scalability in a shorter time horizon).  

I am not afraid of going out of my comfort zone, as I have in the past - It's more of a question of risk/time factor vs. reward.