Experienced investors looking to scale

[William A Colas]

Hey guys, been lurking on BP for a couple years. My partners and I (3 of us) are based in Miami FL (not the easiest market at the moment) we are all realtors / brokers and investors, each have 20+ years of experience down here, have done multiple ground up single Family and duplex builds and currently have a portfolio of single fam and duplex properties. We want to make the jump to our first true multi fam property 20+ units. Can be local or not... Logically we keep telling ourselves, we have the experience to easily make the transition but mentally there's a big difference when dealing with 100's of thousands of dollars on a single fam / duplex and millions of dollars on a 20+ unit property. We are having a hard time coming to a consensus of how to identify, underwrite, and basically take the jump. ( we don't want to screw it up lol) I've searched this topic on the forums but figured someone could give some insights given our situation. We started looking at coaching programs and some of these things just seem ridiculous at 20-40 grand, and some seem more like life coaching programs as opposed to real estate programs. we don't want to syndicate we really would just like to find someone that we can bounce deals / ideas off of and have them assist in underwriting and giving us a better sense of security that we are doing the right thing. Any thoughts or advice on a program that could work for us?

[Bud Gaffney]

Can you go in alone? Why 3 partners? 

[Bud Gaffney]

If you buy a 5 family alone, it's the same as buying a 20 family with 3 other partners.

[Shafi Noss]

I could recommend a couple of people to do consulting. 

[William A Colas]

Quote from @Bud Gaffney:

Can you go in alone? Why 3 partners? 

 Because this is the business we've built together, we enjoy working together, we each have roles that reduce the work load on the group and personally I like that the risk is spread out.

[William A Colas]

Quote from @Shafi Noss:

I could recommend a couple of people to do consulting. 

 That could be interesting.  Thanks.

[Bud Gaffney]

Fair points! So you're forbidden to do any deals on your own?

[William A Colas]

Quote from @Bud Gaffney:

Fair points! So you're forbidden to do any deals on your own?

Forbidden is strong definitive word. 

I would say that our interest lies in growing and making money together rather than alone.   Doing it alone is no fun. 

[Greg Kasmer]

William - I know a few mentors/coaches who do coaching programs for $8-10k. Not sure if that is within your budget/expectations, but feel free to reach out and we can connect!

[Amy Heitner]

Hi William, that's awesome you are thinking of taking the jump to multifamily! A mentor can be a great idea but make sure they have walked the walk and align with your goals. As you mentioned, there are plenty of coaching programs that cost a small fortune and may not be all that helpful. Sometimes the best way to find the right type of mentor is simply growing your network and going about your business. You can also learn a lot by doing your research on underwriting and finding the right deals. Plenty of successful multifamily investors have written books or have podcasts where you can learn a lot for almost nothing. I would also keep in mind that very often it is not so much the decision itself but the decision maker that determines the success of a course of action. Multifamily is a solid strategy and with you and your partners real estate experience, I'm sure you will find success. 

[Steve K.]

Hey William, what about adding another partner that has experience doing larger deals? I'm sure there must be someone in your network that is successful in this. You could try reaching out to ask questions and maybe that would turn into a sort of mentorship type relationship if adding a partner is not on the table. 

[Branden Rivero]

Quote from @William A Colas:

Hey guys, been lurking on BP for a couple years. My partners and I (3 of us) are based in Miami FL (not the easiest market at the moment) we are all realtors / brokers and investors, each have 20+ years of experience down here, have done multiple ground up single Family and duplex builds and currently have a portfolio of single fam and duplex properties. We want to make the jump to our first true multi fam property 20+ units. Can be local or not... Logically we keep telling ourselves, we have the experience to easily make the transition but mentally there's a big difference when dealing with 100's of thousands of dollars on a single fam / duplex and millions of dollars on a 20+ unit property. We are having a hard time coming to a consensus of how to identify, underwrite, and basically take the jump. ( we don't want to screw it up lol) I've searched this topic on the forums but figured someone could give some insights given our situation. We started looking at coaching programs and some of these things just seem ridiculous at 20-40 grand, and some seem more like life coaching programs as opposed to real estate programs. we don't want to syndicate we really would just like to find someone that we can bounce deals / ideas off of and have them assist in underwriting and giving us a better sense of security that we are doing the right thing. Any thoughts or advice on a program that could work for us?

You already know how to do it, you want/need assurance. Ive seen what you do and I bet you guys are just over thinking this. Let's meet up soon I have put together a few of these deals (20+ units) and in the works of building some from the ground up

[William A Colas]

@Branden Rivero I'll hit you up on IG.  

[Matthew Drouin]

@William A Colas

Smart to partner.  When you are dealing with community banks, they actually like to see diversified ownership.  It spreads their risk.

In regard to market, there's a couple of different approaches my clients take:

1.) Markets that have 8%+ on stabilized cap rate deals. Generally we raise capital from investors who want a fixed income and have enough meat on the bone to keep all the equity in the deals and push the valuation and also obtain commercial financing where we can get 75-80% LTV financing and still maintain a DSCR of 1.2+

2.) Markets with sub 8% cap rates, generally the cash you need to raise is going to be true equity and since the cash flow would be too tight from a DSCR perspective, you have to put down way more than 20%. But assuming its a stable but growing market, every dollar of Net Operating Income you are able to force is explosive to the underlying asset value.

Under both of these scenarios, you do not need to syndicate as long as you don't go too big on the deal size.  I've built a $18M RE portfolio without ever having to do a syndication.

I hope I answered your question properly!

[Alecia Loveless]

@William A Colas I’d recommend starting with something in between. Like a 10 unit.

When I purchased my first 8 unit it was significantly more difficult than my previous 3 and 4 units are.

Costs will be more and the work level will be greater.

Yes, the economies of scale are better but I feel the jump from duplexes to a 20 unit will be much more challenging than you think.

[Worth Woodyard]

I agree with Alecia-

I would start with something smaller, find an city/area of town you like. 
Figure out what grade of property you guys want. Value add ( do you want to do reno/raise rents), or stabilized (income producing, lower maintenance). 

Find out what works for you and your team on smaller deals then scale up once you start to get comfortable with multifamily. 

Sounds like you just need to find a deal that makes sense.. reach out if you want to pick my brain.