How I Bought My First Apartment Complex(es)

[Mark Allen]

I started investing in residential real estate in 2009 while in college at West Point (USMA). I entered the Army and was able to leverage the equity to grow a small portfolio which I eventually sold off to flip homes in the Dallas area. A few years ago I exited the military and knew I wanted to be involved in some shape or form in the commercial real estate industry. I spent two years working for a software company in sales, while saving money to eventually quit and broker multifamily. During this time I was active networking and learning as much as I could about multifamily so I could hit the ground running (valuation, management, renovation, lingo, etc.). I debated joining a local mentorship group and remember seeing a post by Joe Fairless e about how to do your first multifamily deal by adding value to an investor with experience - Either underwriting, finding a deal for them, etc. (sorry I don't have the link, but that post changed my mindset, thanks Joe). I knew with my network, hustle and me being a multifamily broker, I could get my first multifamily deal done without spending $20,000 on a mentor program. In my first seven months as a multifamily broker, I've had two deals close, and 4 more set to close before year end; two of which I will be partner. I connected with a New Jersey investor at the end of last year who has been involved in Dallas multifamily since the early 2000s (longtime relationship with my brokerage office). He has owned and managed thousands of units and his biggest challenge today is finding good deals, so I proposed a potential partnership pending I could solve his challenge. I found two off-market, Class C properties; one in Irving and the other in Greenville, 231 total units between both properties. Both owners were over the age of 75 and ready to sell. Each property was well under market rents, 99% occupied, outdated interiors, deferred maintenance, and huge operational upside as they were both self-managed. We're conservatively projecting 15%+ return on equity in Yr 1 with 2 years of IO. Ideally, we'd like to add-value and refinance within 3 years, but all market dependent. Up-front I get a 5% equity share, plus another ~1.5% for investing $50,000 of my own money. So not majority owner (two other partners who are putting up $3mm in equity), but I'm able to get my feet wet and continue to learn. I know they say it's not over until the lady sings, but if all goes as planned, we're set to close this Thursday. I'm super pumped to repeat this model while the majority of my focus goes into brokering multifamily. Ideally, I'll focus more on investments during a down cycle.