Rapid Growth to 21,000 Units

[Jordan Santiago]

Hey BP,

I recently read a story about 3 entrepreneurs in their late 20s doing syndication. They acquired 21,000 units in about 8-9 years. 

My question is, how is that even possible. I know there’s a lot of syndicators on this platform so I wanted to get some feedback from that. I know this business is in no means a get rich quick plan, or easy. But, if they did it, I don’t see why it can’t be duplicated.

Any thoughts as to how they grew so fast?

[Michael Ealy]

Originally posted by @Jordan Santiago:

Hey BP,

I recently read a story about 3 entrepreneurs in their late 20s doing syndication. They acquired 21,000 units in about 8-9 years. 

My question is, how is that even possible. I know there’s a lot of syndicators on this platform so I wanted to get some feedback from that. I know this business is in no means a get rich quick plan, or easy. But, if they did it, I don’t see why it can’t be duplicated.

Any thoughts as to how they grew so fast?

 Jordan,

Sure it can be done. I've acquired 8.6% of what they have doing it longer because I focus on quality deals. That's why I never lost money even during the Great Recession of 2008-2009. In fact, I've made more money during that time. It remains to be seen if they will survive the next downturn.

I am not discrediting those guys though. Good for them. They're smart & they hustled - they bought right after the downturn and they aggressively raised capital. They probably gave away 90% of their equity (is my suspicion) in order to raise big money in a hurry. 

But, I only give up 30% (and sometimes 50% of the equity). In other words, even if I assume 50% equity, with the 1,000 apartment units I hold now, I am making the same money as someone with 5,000 apartment units who give up 90% equity and I have 1/5th the management headaches.

But going back to your question: how is acquiring 21,000 units in 8-9 years even possible?

1. Don't start with buying houses but rather partner up with established apartment syndicators.

2. Focus on finding good deals (100+ units as institutional investors love 100 units and above)

3. Aggressively raise BIG capital from institutional investors leveraging on the credibility and track record of established apartment syndicators (and give up 90% equity)

4. Hire out great PM companies

5. Do value-add on the apartments acquired 

6. Raise rents, raise value 

7. then Refinance to buy even more apartment communities

In other words, do BRRRR but with apartment complexes