These Are the 5 Paths to Multifamily Mastery [New Video!]

by | BiggerPockets.com

As a real estate author, investor, podcaster, and BiggerPockets blogger, I’m constantly asked about the best path into multifamily investing. In this short article, I’m going to briefly outline five paths to multifamily mastery.

Many of us who’ve been flipping houses have come to realize that flipping is transactional. It’s not necessarily a way to build and grow long-term wealth. I’ve made a lot of money flipping houses. And while it was great income, I had to take other steps to translate that to the creation of real wealth.

If you’ve gone down the perilous path of owning and managing a slew of single family rentals, you know what a hassle that can be. Most who do this sell their portfolios in frustration. I can’t recall many individual owner/landlords who were able to keep this up for decades — no matter how sincere their plans.

Many flippers and single-family landlords have left these paths to try and figure out how to enter the large scale multifamily world. Where the sun never sets and everything is rainbows and butterflies.

Well, not exactly. But multifamily is a great place to acquire and build multi-generational wealth.

The current popularity of multifamily has made it challenging to get into. Like I said, I’m regularly asked how to enter this arena.

Here Are Five Paths to Entering the Multifamily Space

1. Build A Portfolio From The Ground Up

This is a long and hard path, but it is doable. I know a guy in Dallas who put down $1,000 on a duplex in 1993. He fixed it up, rented it out, and sold it for a profit. He rolled that into a fourplex — then a 12-plex. Then he kept growing one property at a time. I tried to buy his 132-unit apartment complex in 2016 for $11 million. He was jumping up from there to almost 200 units next.

2. Become a Multifamily Deal Finder

If you have an inside track on apartment deals, you can play a valuable role by referring these deals to syndicators who are hungry for new opportunities.

Find a firm that is looking to buy, understand their criteria, and strike a deal to get a piece of ownership in the process. Most importantly, ask the syndicator to teach you the ropes along the way.

When you take this path, don’t just send deals from Loopnet or brokers. That’s a quick path to irrelevance. And make sure you add some value through due diligence and by running the numbers. Come up with your own value, and tell the syndicator what you think the pros and cons are. Try to dig up some hidden details that would not be obvious at a glance.

When we bought a townhouse community recently. Someone clued us in to the high utility bills, which made us look closer at a property that we could have overlooked. Learn the ropes, and be that valuable someone for a syndicator who will train and reward you.

Related: Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate

3. Become a Capital Development Specialist

Many multifamily operators are looking for capital to grow their portfolios. Ask one of them if you can join their team and raise money for their deals. You can’t earn a commission, but you can ask for ownership in a deal, and you can learn the business in the process.

It’s been said that raising capital is the most coveted and important skill in all of business. If that’s true, this transferable skill could bring you big dollars inside or outside real estate.

If you get really good at this, you may even choose to set up your own fund. Then you can raise capital and direct it to a variety of sponsors, deals, and asset classes.

One major side benefit for me is that when I learned to raise capital for real estate deals, I was also better positioned to raise funds for nonprofits that I’m passionate about.

I am committed to raising money to fight human trafficking and to rescue its victims. As someone who can raise capital, I now have both the skills to do that and perhaps as importantly, more contacts with high–net worth individuals who may contribute.

4. Enter the Business as a Passive Investor

If you’re determined to learn the business and have funds to invest, invest with an operator. Ask to look over their shoulder to learn the ropes as they acquire and operate a new multifamily asset.

But don’t just go into it looking for what you’ll get out. Offer to assist them free of charge, and you may be surprised at how much you can learn. I met a guy on BiggerPockets last fall who invested in our last deal and came along for the ride. I’ve got a new friend and hopefully he’s learned a lot along the way.

Related: Here’s Why I’ll Never Sell My Multifamily Investment Properties

5. Get a Mentor

Honestly, there may not be a more effective way to ramp up your investing career than to get a mentor. If you get a great mentor, buckle your seatbelt and be prepared to dive in deep.

Even after decades as an entrepreneur, I hired a mentor to jumpstart my multifamily career. And I’ve never regretted it.

Most great mentors will let you partner with them on deals, and some may bring you deals to get you rolling. I’ve met lots of great mentors — many of them through BiggerPockets.

I recommend my mentor regularly, and if you’re interested, contact me privately so I can brag on them.

By the way, have you signed up for a BiggerPockets Pro membership yet? I did a year or two ago, and it was one of the best decisions I’ve ever made.

BiggerPockets offers free content, tools, and a community of over a million members to help you avoid mistakes; learn valuable tips; find partners, deals, and financing; and make the best investment decisions possible.

The goal of BiggerPockets is to provide each of you with the resources and support you need to find your own success — whether that’s quitting your job to invest or simply creating additional passive income.

Click here to check out the other benefits of signing up for a BiggerPockets Pro membership. Use the discount code SEARCH to save 10 percent on an annual subscription.

Have you recently entered the multifamily arena?

What tips can you offer others in our community? Share below!

About Author

Paul Moore

Paul is author of The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing, which you should probably get if you want to learn to invest in multifamily. He leads Wellings Capital, a multifamily investment firm, and hosts the How to Lose Money podcast. Paul was 2-time Finalist for MI Entrepreneur of the Year, has flipped 60 homes and 30 waterfront lots, developed a subdivision, and appeared on HGTV. Paul’s firm invests heavily to fight human trafficking and rescue its victims.

10 Comments

  1. Christopher Smith

    I was able to acquire a SFR portfolio that has already achieved long term wealth in a short term period (avg hold period about 6 to 7 years now). Started with just over 1m and total take to date is another 2.6m, .6 rental income about half taxed, the remaining 2 of underlying appreciation, none of which has been taxed (yet at least).

    Still rolling strong today, although returns will normalize and future appreciation will be significantly less going forward. I’ve looked at 1031 roll out of SFRs into multi family, but like everything else now those properties seem to be way way over priced.

  2. Dave Rav

    I keep hearing more about multi-family REI!! I wonder if that has something to do with those admins and higher-ups at BP being involved in this facet of investing (Turner and the like).

    I’m actually in MF myself. Started out with a duplex as my first property, and now have a 5-unit. This is in addition to the other RE currently in my portfolio.

    But, I’m looking to learn more about BIGGER multi-fam properties like maybe an 8-15 plex. (I realize some of you have a 100-unit complex, or larger, but for me right now an 8-plex is big!) Or even a small-medium sized MHP would be nice. Need to capture something like this!

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