How do I get involved with Large-Scale Multifamily Investing

Question

Afternoon friends,

I am looking to make jump, right now I am looking for ways to get involved with large multifamily investments. I'm tired of looking at small scale 4-plexs, 6-plexs and 8-plexs that will only net me small profits after debt coverage ratio and expenses. Iv'e realized that I have to have a very healthy net worth to get commercial debt. Total net worth needs to be up to the total amount of the loan with liquidity of up to one year of principal and interest payments.

My question is how do I make a leap big enough to be semi retired. Right now I am able to finance up too 500k with a 800+ credit score but that only gets me small scale multifamily and will take me yearsss to scale up enough to get to a larger multifamily level and get to a semiretired status. Help!

Jordan Moorhead · Answer

What's wrong with it taking a few years? Start slow and scale up. Get rich slow and predictably.

Also go to @Joe Fairless Best Ever Conference

Justin Kane · Answer

@Charles Soper said it right, get that education in first. and Joe Fairless has and awesome little starter course for free

but you also need to identify what you can bring to a partnership.. you dont need to go lone wolf in fact i recommend against it, ive owned smaller apartments lone wolf but have seen much bigger wealth through partnering and sponsoring. Do you have asset, construction, property management experience? Do you have fannie freddie gold card to sponsor? Maybe you just have the connections to raise money and analytics to plan and do the reports and investor relations...

PM and I can give you more detailed help

Charles Soper · Answer

Lots of places to start but likely you’ll need the education piece in place first.  Try these guys out to start:

Rod Khleif, rodkhleif.com

Michael Blank, themichaelblank.com

Joe Fairless, joe Fairless.com

Hope that helps

Chase Louderback · Answer

Going to echo everyone else in the thread that education is extremely important.  The market is competitive so you absolutely must know how to underwrite these deals.

Michael Blank's Ultimate Apartment Guide gave a great dive into the knowledge and underwriting skills needed for larger multifamily.

I've heard great things about Joe Fairless's new book but haven't gotten to read it yet.  Dave Lindahl's books, Multifamily Millions and Emerging Markets, were a fun read and had a good overview on market selection and multifamily investing.

Luke Miller · Answer

@Jonathan Masiello I feel you, man. I dabbled in small multifamily for a while and it was tough going. The properties were smaller, older, in worse condition than in larger assets (at least the ones i'm looking at). As @Scott Morongell said, getting rid of your limiting beliefs is a good thing! However, equally important is getting rid of the tunnel vision of getting retired as quickly as possible.

A good way to start in syndication is to raise as much as you can for another sponsor's deal. You'll be part owner and get tons of experience. However, it is likely that you won't raise a ton of money and your ownership will be very small. You'll maybe make a few grand in cash flow per year. That's not life-changing money. However, stack a few of those, start to get bigger pieces of the pie and you'll make decent money. Syndication isn't this secret that will make people rich, in my opinion syndication is so attractive because it allows you to get into professional, more stable, assets that are much lower risk.

Scott Morongell · Answer

@Jonathan Masiello getting into larger projects requires 2 things. 1. Education and 2. Getting rid of limiting beliefs. With large apartment complexes many use the model of syndication. I urged you to check your "why". You mention semi retire, this is unachievable through syndication since you are dealing with other people's money. However, is you take the passive investment approach you are able to retire as your a limited partner. There are many on BP who offer coaching/mentorship programs. If your looking to be a syndicator I would highly recommend getting some education as it will shorten your learning curve and help you when it comes to buying deals.

Theo Hicks · Answer

No matter what strategy you pursue, it is going to take you years. So I wouldn't make that your main consideration. Find an investment strategy that you like and that you are good at in order to minimize the frustration and chances of giving up before reaching the semi-retired state.

Others in this thread have pointed you to great resources to start working on your syndication education.

Lane Kawaoka · Answer

@Jonathan Masiello

The crossover point occurs if you can save $30k a year or have substantial liquidity (over 200k).

If your net worth (income minus expenses) is under $200,000 or barely save $30,000, syndications are not for you. Stick with these Turnkey rentals or smaller stuff for now. They have a little higher gains (a lot more volatility) but a syndicator who is willing to put you in a deal with more than 10-20% of your net worth is asking for trouble.

Earl Hatmaker · Answer

@Jordan Moorhead have you attended this in the past? I just attended the cincy master mind group on Tuesday and wanted to go to the conference. Unfortunately I am not able to attend  this year...

Larry Caper · Answer

"If you want to go fast, go alone. If you want to go far, go together."

Focus on surrounding yourself with quality/knowledgeable people and identify creative methods to find a "snowball" property, something that isn't out of your league that provides the proof-of-concept (and confidence) you need to level up. Yes, education is important to learn the fundamentals, but I'm a firm believer in learning on the fly and immediately applying what you learn.

Much like yourself, I'm looking for my first commercial property (35+ units). My real estate mentor informed me, "do not focus on deal size, hone in on deal/team quality, the rest will take care of itself." Become clear on what your goals are, why you choose those goals and start building relationships with an alignment of interest to bring the goal to fruition.

How do I get involved with Large-Scale Multifamily Investing

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