HOW TO GET STARTED IN MULTIFAMILY INVESTING
4 paths toward your goal
Luis and I were talking on the phone this morning. He is a college basketball coach in New England. We worked together several years ago as he got started in real estate investing. He bought his first duplex and has since added on a third unit.
“One day I will own a large apartment complex,” he told me. I have no doubt he will. He is that kind of guy.
Many people I talk with in our local real estate meetings say they want to get started in multifamily investing. For most, it is just talk. Year after year, they say they want to start, but year after year they do nothing.
It is one thing to talk. It is another to take action, the kind of action that leads to results.
Before I share four ways you can get started, be aware that investing in apartments is not for everyone. There are risks. Of course, there are significant positive reasons for doing so as well. But, before you spend a lot of time, get in touch with why you want to do this and what level of risk you want to take.
Now, here are four ways you can get started in multifamily investing so that you can start getting the benefits.
1. READ BOOKS
I started by reading books on multifamily investing. I also read many articles I found on the internet. This first approach may not be for you, but it worked for me.
By reading about investing in apartments I became well versed in the vocabulary. I learned concepts such as market analysis, CAP rates, the classes of apartments, net operating income, and more. I also heard stories of failures and successes by those who have gone before me.
I gained some confidence in my pursuit. I also found confirmation that this was something I really wanted to do and could be successful if I did it.
Among many others, here are some books that might help you…
· Brandon Turner and Brian Murray – “The Multifamily Millionaire”
· Rod Khleif – “How to Create Lifetime Cashflow Through Multifamily Properties”.
· Michael Blank – “Financial Freedom with Real Estate Investing”
· Brian Murray – “Crushing It in Apartments”
2. TAKE COURSES
Thousands of people like you also choose to take courses with some of the experts on multifamily investing. This, of course, will likely cost you a lot more than the cost of a book or two. I have found courses offered live, some two days in length, some longer, can cost between $295 and $1,995 and more.
Add on the costs of lodging and meals and these can be expensive. They can also be a major accelerator on your path to becoming a multifamily investor, too.
It depends on who is teaching and what content is being covered.
The advantages of a course are many.
One is the networking you will be able to do with others who are attending the course. Some will be new like you. Others will have significant experience. Be sure to use your time at breaks and over meals to get to know others.
Another is the intensive, deep dive into multifamily that many of these courses offer. Find one that fits your level of experience and learning objectives.
Here are a few, among many, who offer good workshops, courses, and conferences. Google them.
· Jake and Gino
· Michael Blank
· Neal Bawa
· Anthony Chara
Mike Bocanegra, Mike Jacobson, and I have taken the five-day course with Anthony Chara. This was intense, but so, so helpful.
If you are more of a hands-on kind of learner, try this third approach. It also is a good next step after reading and going to a workshop.
3. LINK UP WITH AN OPERATOR
Some of the other operators I have come to know attribute their success to linking up with someone who has a track record in owning and operating multifamily real estate.
This is perhaps the most effective of the ways of getting into apartment investing.
Jim found someone that had just put a property under contract and was starting his due diligence before actually buying the property. Jim called him up and said he was willing to help, not expecting to be paid, but simply wanting to help and learn by doing.
The operator said yes, and Jim showed up every day for a week, helping to walk through every unit, documenting the condition of each one. It was hard work, but Jim built relationships with the others on this operator’s team. He was invited back to help with another phase of the project.
Soon, Jim was being coached by the operator. These days Jim has built his own portfolio of properties.
David attended a conference with one of the “gurus” who teach them and put up about $10,000 to join this teacher’s mastermind. He took additional courses, met quarterly with other advanced students, learned multifamily in depth, and linked up with a small group of students to locate and make an offer and purchase a property together.
The “guru” coached the team, shared resources such as suggestions of attorneys and accountants and property managers and helped with the promotion of the syndication.
This has worked amazingly well for David, making it well worth his investment of time and money. He recently closed on over 300 units in two properties.
Here are some of the “gurus” who offer advanced learning and action taking…
· Brad Sumrock
· Mark Kenney
· Michael Blank
4. INVEST PASSIVELY
If you are not really interested in being an active investor but want to take advantage of the significant advantages of multifamily investments, a fourth very effective approach is to be a passive investor.
You get to leave the management to others. The return on your investment might not be as large as an operator might receive. But, the amount of time required to invest along with your money will be very limited.
It is a challenge to be an operator. I know this personally. And the responsibility can be quite heavy, too.
Passive investors often get involved in multifamily investments by being a part of a syndication, a group of other investors, who put up the capital needed to purchase a property but don’t have any responsibilities for operating it. They are passive.
We have 17 passive investors in one of our apartment complexes. We communicate with them monthly about what is happening at the property. We send quarterly income and expense statements, vacancy reports, objectives, and accomplishments. We meet periodically, answer questions, and keep in touch. We do all the work of operating the property. They receive benefits, passively.
WHAT IS YOUR NEXT STEP?
I am regularly helping people take their next step in their interest in multifamily investments. Some want to be passive. We talk about how that works. Others want to be operators themselves. The first three approaches above work for learning how to be and actually getting started in this niche.
What is your next step?
HELP US GET TO KNOW YOU BETTER
Where are you on your real estate journey? Which of the four paths above appeals to you? Do you have any simple investing tools that you are willing to share?
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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.