I have set a goal to be involved in a MF acquisition by EOY.

Multi-Family and Apartment Investing
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I have set a goal to be involved in a MF acquisition by EOY.

Jared Carpenter
Specialist · USA · Member since 2016 · 226 posts · 51 votes

Hello,

My name is Jared Carpenter and I have set a goal for myself be involved in a multi-family acquisition by the end of the year. 

As I am new to this, I could thing of no better place to start than to involve myself in the Bigger Pockets forums and speak with anyone and everyone that has experience or shares the same motivations. 

I live in Salt Lake City, Utah which is an extremely hot market and many people argue that deals are becoming more and more difficult to come by in this area. I would love to meet people who are investing in multi family in the Wasatch area, so please reach out to me and I'm happy to buy you lunch and a coffee!

I would love to talk about strategies, markets, financing, success stories as well as the war stories, all while building meaningful relationships. Most importantly, I want to find ways I can help. I have talked to many real estate investors before but never anyone who deals solely with multi family.

I spent three years grinding as in investment banker, then made a move to pivot my career towards my passion, the real estate industry. Like many, my initial goal is to create financial freedom, and in the future strike a more rewarding work/life balance through owning a portfolio of units throughout the country.

Can't thank you enough!

Jared

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Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
9y
Jared Carpenter That is such a weak and disappointing goal. You are going to "be involved" in a multi family purchase? What does that even mean? It sounds like an excuse to not have a real solid goal. How about "I am going to buy a large multi family property this year."
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  • Chase Keller
    CCIM · Des Moines, IA · Member since 2014 · 341 posts · 170 votes
    9y

    Hey @Jared Carpenter!

    Good to see you on the forums. That's an awesome goal.  What about multifamily excites you?  What kind of multifamily are you targeting?  I've heard Salt Lake City is a hot market. Much of the country is hot right now. 

    I'm not in your area, but I'd love to help you any way I can!  What resources do you have to get started?  To quote The Real Estate Guys, you need all 5 resources to be successful: time, talent, relationships, cash and credit. Luckily they don't all have to be your resources, you can borrow from others in many ways. 

    Good luck!

    0Reply
  • Rebecca Belnap
    Rental Property Investor · Lehi, UT · Member since 2015 · 195 posts · 133 votes
    9y

    I'm not a big investor, but my business partner and I have a triplex, duplex, and a single family.  We are about to close on another duplex before the end of the month.  It is a very tricky market right now and multi-family units are going for prices too high to cash flow if you are looking on the mls.  My advice is very much influenced by the amount of down payment you have and the level of involvement you want.  You said you are an investment banker, so if you have the 25% down for a large multi-unit I would go with 5+ units since so few can qualify.

    You are unlikely to find seller financing in this market, but I could be completely wrong.  I know several wholesalers with the ability to talk sellers into amazing deals.

    If you have very little investment money, some people like to house hack. I even know of one grant program (Chenoa fund) that on a case by case basis with gift the 3.5% down to buy a duplex. Has to be owner occupied, but it's free and never has to be repaid. If you want a 4plex, 3.5% down with an FHA loan.

    War stories can be pretty bad.  I did property management for my parents while in college which is where I made all of my mistakes.  I've had death threats, people coming to the door in the nude, late night arrests, sewer back-ups and all sorts of fun.  I've also met wonderful people who are grateful for good clean housing and always pay on time and these are the most common.  In the end, it makes it worth it.

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  • Jordy ClarkPro Member
    Investor · West Jordan, UT · Member since 2014 · 45 posts · 31 votes
    9y

    SLC is tough right now, but the deals are still out there. I saw a 5 unit off market deal a few days ago near liberty park that was about 100k/door. rents close to 950/door. pretty close to the 1% rule, but it needed work and was almost 100 years old! 

    Expect the average deal on market to be around a 5 or 6 cap. less if you want to be up by the University of Utah or in sugarhouse. I personally like SFR much more than multi. the exit is easier in slc.

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  • Chris Tracy
    Specialist · Plainville, CT · Member since 2015 · 478 posts · 389 votes
    9y

    @Jared Carpenter- What size deals are you looking to do/ what's your buying criteria?

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  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    9y
    Jared Carpenter That is such a weak and disappointing goal. You are going to "be involved" in a multi family purchase? What does that even mean? It sounds like an excuse to not have a real solid goal. How about "I am going to buy a large multi family property this year."
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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Chase Keller Nice to meet you Chase, thank you for the welcome. There are a few things about multifamily that excite me and lead me to believe they can continue to be a great investment:

    - access to better financing options and strategies

    - as an investor in multi-family, you're in a position where property management makes sense

    - growing a portfolio takes less time

    - replacement costs are much higher in many markets these days

    - millennials simply aren't buying homes

    - approximately 75 million baby boomers are headed to retirement

    - many of todays apartment complexes can be converted into retirement communities in the future

    In response to your resource question: I have a bit of cash, I make the time to take care of priorities, my credit is in great shape, and I would like to believe I am molding myself into a talented and skilled investor but am humble enough to know I have a lot to learn. What would be helpful is to build relationships and learn from someone who has done it before, and find equity partners as my net worth is not up to what would is required for conventional loans.  Do you have any advice on partnering up, putting down 20-25%, and 30 year financing?

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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Anthony Gayden

    Appreciate your frankness chief. I am wondering if behind your comments there is encouragement, or if you think I am just ridiculous? 

    To me, what being "involved" means is taking part in a deal, whether that is on my own or if that is a deal which I can partner up with someone and learn the nuances and specifics.

    In my research, in order to acquire a property over 5 units I would need a 20-25% down payment, 9-10 months of debt service available, a replacement reserve balance and most importantly a net worth greater than the loan. As disappointed as I am to admit, I do not have all those requirements checked off. Rather than sit on the sidelines, I still want to be involved and learn, and perhaps show some fellow investors what I can bring to the table and build my position of growth.

    I understand the financing terms I laid out above are vanilla, and that there are more creative ways one can go about - I assure you I am not lazy nor looking for an excuse, I just am too green currently to know all that, hence my post and desire to talk with people.

    What else do you have Anthony, throw some more at me.

    2Reply
  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Chris Tracy

    Hi Chris - as this would be my first deal I am hoping to not bite off more than I can chew. 

    - 20 to 35 units to begin

    - markets with strong job and economic growth

    - C/B class property and location

    - value add component

    1Reply
  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Jordy Clark

    Hey Jordy, nice to meet you! 

    Thanks for the info, do you send out an emailing list of off market deals - I would be interested to just see the numbers and returns of what you're seeing. Would you be willing to further explain the challenges you see in exit strategies with multi opposed to SFR in our market?

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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Rebecca Belnap

    Hi Rebecca! Thanks for the reply, very helpful. Your war stories definitely gave me a chuckle - this is why I am hoping to acquire larger properties where I can benefit from a management team. 

    At this point in my life, having a wife and two kids, I dont think house hacking will cut it. I have cash to cover the down payment, but I know I will need to eventually partner up to check off the other loan requirements. Perhaps, an option would be to instead use my 20-25% down payment cash to purchase enough 4plexes to increase my net worth, and then acquire a larger multifamily down the road...just not sure and don't know enough to have put together a well thought out strategy yet. Wholesalers typically like to work with cash only buyers correct? So you're saying I should go with a larger 5+ unit property because there will be less people who can qualify to make such a purchase, rather than involve myself in the battle of du, tri, and 4plexes?

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  • Chris Collins
    Multifamily Investor · Newport Beach, CA · Member since 2015 · 176 posts · 182 votes
    9y

    @Jared Carpenter

    You may or may not have listened to all these, but I found Michael Blank's podcast to be indispensable in 'getting comfortable' in this space.  If nothing else, listen to the first 5-7 of them, so you get the basics.  Learn to 'speak the language' and how it all works, so when you walk into meeting with potential investors, you can hold your own at the table.  

    http://www.themichaelblank.com/podcasts/

    I'm excited to hear what you do in the coming months, how you achieve your goal, and how scary/not scary it is for you. GO GET EM!

    @Michael Blank

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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Chris Collins 

    Thanks for this, I am diving into these podcasts as we speak!

    0Reply
  • Andrew Campbell
    Multifamily Syndicator · Austin, TX · Member since 2015 · 127 posts · 247 votes
    9y

    @Jared Carpenter  Congrats on putting your goals out there. 

    Step #1--Get Educated.  You're doing that with this post, podcasts, and books.  Check. 

    Step #2--Get a Mentor who's done deals.  Find someone (local) who you can add value to and learn from. 

    Step #3--Start talking to everyone in your life about your new passion/profession.  You're going to need to start raising capital to get these bigger deals done, and the sooner you can start changing people's perceptions about who you are and what you do, the easier that will be.  Its likely also the easiest way to get involved in an initial deal. 

    Good luck!

    0Reply
  • Rebecca Belnap
    Rental Property Investor · Lehi, UT · Member since 2015 · 195 posts · 133 votes
    9y

    @Jared Carpenter Exactly right. The battle for small multi-families from Odgen to Payson along the I-15 corridor is fierce. You can find some good deals if you really dig, but anything on the MLS is gone in 48 hours or not worth having. Larger 5+ units scare off the casual investor and the prices per unit drop as a result.

    Another option is single family homes.  They are easier to flip if you need quick cash, and property management companies still tend to give you a volume discount if you have several in the area.  You have to look very hard to find ones that cash flow right now.

    0Reply
  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Andrew Campbell

    Thanks for the advice and blueprint sir!

    Step #2 is where I am finding resistance - any advice on how to find a mentor I can add value as well as learn form? Could you talk about this further? Are you a mentor for anyone and if so how did they find you?

    Thanks!

    0Reply
  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    9y
    Jared Carpenter I want you to succeed. I don't think you should water down your goals. If you want to buy a large multi family before the end of the year then say it and do it.
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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Anthony Gayden

    Thank you for your support, I understand where you're coming from and see the benefit of what you are saying. I have outlined a few of the obstacles I trying to work around, do you have any advice or input on these topics?

    0Reply
  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    9y
    Jared Carpenter Of course I have advice. Obviously to most people the biggest barrier to these deals is the money. You have to look at what other successful investors have done to complete these deals without huge sums of money. Owner financing, master lease options, partnerships, and other creative financing techniques.
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  • Jared Carpenter
    OP
    Specialist · USA · Member since 2016 · 226 posts · 51 votes
    9y

    @Anthony Gayden

    Would you consider yourself a successful investor in the multifamily space who began without huge sums of money? Could I look to you to see what you have done to complete these deals?

    Owner financing is the same as seller financing - correct? Could you explain master lease options and other creative financing techniques you may have used further please?

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  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    9y

    @Jared Carpenter

    I consider myself to be in a very similar position as many. I did not have the funds necessary to invest in the deals that I wanted, so I compromised and I regret that I did not push harder. 

    I had large goals when I started that I allowed myself to shrink because it was hard. I don't want others to make the same mistake I made. I want others to succeed where I failed. Recently I decided to fix that problem but I wasted years doing little or nothing.

    Have large goals and do not water them down!!!

    Do I consider myself a successful multifamily investor? I personally think I need to continue to push myself as hard as possible until there is no question in anyone's mind whether I am successful.

    What have I done to get these deals? Not nearly enough. The deals I have done have not been of the scale that I originally wanted. I have however done owner financing deals (yes it is the same as seller financing), conventional mortgages, FHA loan house hacking, and a live-in flip.

    I am currently seeking multifamily 20+ unit deals. My goal for this year is similar to yours. I have set a goal to buy a 20+ unit multifamily property by the end of the year.

    Good luck to you.

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