The following is a portion from Chapter 28 in my new book that is coming out soon ("The Aspiring Apartment Syndicator's Prerequisite Course"). Enjoy & I hope you learn a lot!
No, you do not for what we are talking about here. You’re actually buying the properties with investor partners. A license is more appropriate for helping people buy or sell (referred to as brokering).
“Do I need my own company to do this business?”
Many clients I work with want to run right out and set-up an LLC and website, get business cards, create operating agreements with people they work with and succumb to what I refer to as, “Playing Business”. Don’t get me wrong… I always recommend that people seek appropriate legal and asset protection-related consultation from their attorney when appropriate. The point I like to stress is that much of that can wait and in my opinion is not at the top of the list of action items, especially for those just starting out. We will expand more on what the top action items are in this course.
“Are there still good deals out there?”
Yes. Let there be no misunderstanding, the business of investing in apartments IS very competitive. That is why you need an exact system, strategy, and good relationships with the appropriate players, so you can close deals! This course is going to teach you exactly what to say, so you exude credibility and confidence when you are looking for deals.
There are deals out there, it is just going to take hard work and a different strategy. My group analyzed hundreds of deals in the past 3 years (as of the time of this writing) and we acquired 3 (a 20 unit/100 bed, a 36 unit/144 bed and a 225 unit). This was accomplished with consistent lead generation, making phone calls, underwriting and pounding the pavement with networking (w/ brokers & investors).
“I’ve never invested in real estate before. Should I start with buying smaller single family deals and work my way up?”
This is without question, the biggest myth in the field of real estate investing! People start with smaller properties because they think it is safer. Ironically, smaller properties are MORE difficult to scale.
With bigger properties (75 units or more) you can afford to implement a property management company, which allows you to focus on running the business.
You make more money with a pen, than with a lawnmower.
“Will people take me seriously since I don’t have any experience?”
YOU don’t necessarily need to have experience with buying property. You will need to partner with someone who does and just bring some type of value to the table. This concept is the crux of this course.
The person you most likely will need to partner with is called a sponsor and you would leave most of the profits and “meat on the bone” for the sponsor/ investor partners for bringing the cash and/or the experience to the table for you. We will discuss in this course the major components and an example of potential compensations, depending on what you bring to the deal (a good deal, capital, etc.)
“I understand that capital, experience, net worth, and liquidity are all factors for securing investors and financing. What if I don’t have any of these things?”
No worries, determine what you can bring to the table and what you need and go find a JV partner(s). It cannot be understated that finding a good deal IS the most crucial piece of the puzzle in my professional opinion; however, the argument can be made that having your investors lined-up and ready to go when you have a deal is the most crucial. At the end of the day… there’s no absolute right or wrong answer. The more important variable is that you get in the game, one way or another and not be paralyzed by spending time debating about what came first the chicken or the egg.
“How do I find off-market deals?”
Put the following in your marketing materials that says:
“We Buy Apartments” (business cards, ads, flyers, direct mail campaigns, etc.) and the benefits you can offer to a seller:
- Less aggravation of people touring
- A discreet sale
- Save on commission!
- Perhaps we can take over the deal with seller financing? You can still receive an income stream without all the hassle!
If you can make friends or partner-up with a commercial broker that has access to CoStar (that’s fancy software), you can reach out to private sellers and get off-market deals.
Our group loves that strategy.
“How many deals can I expect to do, if I am just starting out?”
A realistic expectation as far as how many deals you can potentially do in your first year, would be 1 significant size deal and then you can most likely expect exponential growth after you close your first deal.
This is assuming you put forth a reasonable and consistent lead generation effort each week.
That typically entails a few hours each day, Monday-Friday of reaching out to deal sources for potential deals (usually in the form of making phone calls, however there are obviously multiple ways to network; i.e. email, social media, face to face, etc.).
Everyone will obviously experience different results when buying investment properties.
“I have a family, a full-time job and limited time… How much time do I need to put into this business?”
The name of the game is making friends (brokers and investors). The more people you can get in front of and the more relationships you can build= the better.
If you can only make calls for 30 minutes/day on your lunch break- do that.
Maybe you give this book to someone to learn the business and you partner with them in some capacity.
Turn off the television.
Just do as much as you can.
The more you put into it = The more you will get out of it.
You gotta want it!
A few hours each day, Monday-Friday of reaching out for potential deals (usually in the form of making phone calls, however there are obviously multiple ways to network; i.e. email, social media, face to face, etc.) will yield you more than enough deals for you to analyze! You will also need to “smile & dial” to raise capital for your deals. Once you close on a deal (depending on how much work you have to put into the property) you can expect to meet with your property manager weekly, then biweekly, then monthly and eventually spend around an hour/week or so to run your deal. Larger deals practically run themselves if you have a solid property management company and is almost autopilot.
I’ve included in the course a worksheet that I use with my clients to help you flush out what you need. Refer to the module at the end of this course- “Putting It All Together” that has the BIG PICTURE AUDIT & STRATEGY FORMULATION worksheet.
“How can I make my first ever investment in real estate be in multifamily/apartments?”
That’s what is so awesome about the business of buying and investing in large multifamily apartments…depending on what you can bring to the table, you can participate in a deal in a variety of ways.
Also, it depends if you want to be “Active” or “Passive”. I will differentiate more on this later in this course.
If you have no money and/or experience, then you need to partner with people who have those things. The value that you can provide is by going out and finding a really good deal, raising capital (you can make money bringing investors to the table for other syndication groups and it’s legal, as long as you acquire a position on the management team for the deal and are compensated for something besides just bringing in investors), underwriting, doing market research, etc.
The majority of this course is dedicated to this concept & strategy.