YOU CAN BE ON THE TEAM
Discover the power of being a partner in an apartment complex
I remember playing baseball with my friends from school. Some of us had our own baseball gloves. Almost all of us owned a baseball, often worn and ragged from use. A few of us even owned a baseball bat.
We would meet at a field in our neighborhood and put together teams and play baseball quite regularly.
As individuals we might dream of playing in a game, but only when we got together were we able to play.
Perhaps you remember something like this. Perhaps you were able to be on a little league team.
Whether it was pick-up games in the neighborhood or organized sports in your community, you realized you could play if you were on a team.
Even the youngest kids in our neighborhood played. They might be picked last, but they were needed to make sure the teams had enough players.
ADDING MULTIFAMILY TO YOUR INVESTMENTS
Consider the similarities with the “game” of multifamily investments.
Some people think you have to be super rich to own an apartment complex. Like owning multiple gloves, balls, bats, and the field to play on.
Well, for a large complex, if you want to own it all by yourself, you would have to have a lot of money. If you do, this blog is probably not for you.
If you simply want a four-plex, you can own one for a lot less, maybe $500,000 or so. But, do you want all the day-to-day work of managing the fourplex?
A lot of people don’t have that much money or time to invest in their first multifamily investment.
Get started soon as a passive investor. Invest some of your available money in one. Learn as you go. Then invest in more later as you become more confident. It is always a good idea to diversify among multiple properties.
But, what if you could be on a team, as in my baseball story above? What if you didn’t have to have a huge sum? What if you could be more passive with this investment? Would that interest you?
You can become an owner in the multifamily space for $50,000, sometimes even less. You can be very passive, in terms of time, as well.
JOINING A TEAM
The key, as with our baseball games when I was young, was joining a team.
Get together with some other potential investors. Each of you does what you can. (Bring a glove or a bll or a bat.) Some of you take on some of the management responsibilities. The rest of you invest funds for a down payment and some working capital.
Partner up with others, as we did in our neighborhood when I was growing up. That is how we were able to play the game. Partner up with others as we do in many aspects of our life today. Much of life is a team sport, isn’t it.
The fancy word for teaming up is syndication. That is a big word that we don’t often use. It simply means becoming partners together for a common investment.
It is kind of like playing baseball as a team. It is hard to play baseball all by yourself. But, put 9 people together and you have a team. If your sport is bowling, you might only need 4. Some syndications have very few partners. Others have quite a few.
I know of a group of 15 people who joined together to raise $2 million and were able to buy a 100+ unit apartment complex.
Perhaps you thought you couldn’t get into multifamily investments. Sort of like the younger kids in our neighborhood. The truth is – they were able to play. And so can you.
CHOOSE YOUR GENERAL PARTNERS CAREFULLY
You will want to have one or more general partners for your team when you invest in an apartment complex. They are kind of like the coaches for a little-league team. The managers/coaches on a baseball team get the uniforms, schedule the games with the other teams, decide who is on first, etc.
The general partners or managers in a syndication or multi-family partnership or team do much the same. They will be the active investors who have responsibilities such as managing the business, hiring a property manager, making the big decisions, and steering the investment.
You and most of the other partners will be what are called “passive investors”. You are in it for the returns the apartment complex produces. You receive the benefits, without the work. And you don’t have to deal with tenants and toilets.
You can’t be in the game without the general partners and they (and others) can’t make it work without you.
The general partners will be sure you are fully informed before you invest. They will also keep you informed regularly on how the investment is going.
As with any investment, the folks who make the decisions and manage the business are very important.
Be sure to check out the general partners carefully.
Get to know them. Learn about their experience and track record. Talk to others who have invested with them. Do you like them? Do you trust them?
Make sure you do. The general partners are the key to being confident in the safety of your investment.
PLAN TO HOLD ONTO MULTIFAMILY INVESTMENTS FOR YEARS
Unlike our pick-up games in the neighborhood in which we could play today and not play tomorrow, multifamily investments do require a longer commitment.
You have many choices for where you invest your money. Most people choose to invest in the “stock market” with individual stocks or mutual funds. There may be nothing inherently wrong with these widely held securities. Over the decades, these investments have done pretty well. Mine did.
Multifamily investments can do even better with additional helpful features and benefits. Mine have.
We have covered five elements that make multifamily an I.D.E.A.L. investment. Check out the previous blog here.
One nice thing about stocks and mutual funds is that they are liquid. You can buy in today and get out tomorrow or next week, whenever you want.
But, be clear that your multifamily investments are long-term choices. Be comfortable holding on for several years, perhaps five to seven years, to allow these investments to produce the kind of returns you desire.
Invest in multifamily for the long haul. This is the power of these investments. Time works in your favor. Check out the blog above and look at the benefits of appreciation and amortization.
Don’t miss the benefit of being able to leverage your investment, which is harder to do with stocks and mutual funds. Also, there can be some significant tax advantages to multifamily investments, as you are learning.
NOW MIGHT BE JUST THE RIGHT TIME
You have been considering adding multifamily to your investment portfolio, haven’t you?
When will you do it?
Now might be just the right time for you.
Go get your glove and join with some others at the field and get into the game.
This may be just the right time for you.
The current high prices for homes and the rise in mortgage rates has pushed a lot of potential first-time homeowners to continue to rent. The demand for apartments is still very strong. People will continue to need a place to live.
You can provide safe, affordable, clean, well-managed housing to meet this need and receive an appropriate return for your investment.
I sure had a great time playing baseball as a kid. And these days, my muti-family investments are actually a lot of fun, too.
Get in touch with someone who knows multifamily investments and see if this is the right time for you.
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Through the power of a syndication partnership with other investors like you, working with managing partners who are experienced in managing apartment complexes, you can own multifamily assets.
Or you can choose to loan money, get in with a clear return, and get out earlier.
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Harland leads our Investor Relations. He is a “repurposed” Pastor and Army Chaplain. He is an author, speaker, mastermind facilitator, and coach. Harland lives with his wife, Barbara, in DeLand, Florida.