How I Found My First 2 Deals as GP and Lessons Learned

[Andrew Schutsky]

Like many reading on here, I began the 2021 calendar year with great ambition; I wanted to close 2+ Multi-family deals as a GP of 50+ units each. Most importantly, I wanted to establish my brand and reputation in the industry, and moving into a couple of deals I felt would be a huge step in the right direction. Coupled with the launch of my podcast, these deals would give me the credibility boost I'd been dreaming of.

I began the year with a ton of action, including the following highlights:

• Joining a mastermind group and hired a coach
• Read nearly every multi-family book I could get my hands on
• Attended several Multi-family oriented conferences (3 to date, a couple more booked for the year)
• Networked at every chance including connections on bigger pockets, local meetup groups, mastermind connections, and linked in connections where it seemed mutually beneficial
• Started a podcast which officially launched in March (now recording our 20th episode this week!)
• Selected my primary market(s) and made a "field" trip to the Tampa, FL areas to get to know the sub markets and meet with brokers
• Began underwriting 5+ properties weekly - originally on my own, but now do this with a few partners

With all the force and momentum created with the actions above, it didn't take too long before I made a few connections that "clicked." Through a connection made in a conference in January, I found I was able to add value to a deal in GA (94 unit value add, C Class property) by helping with the due diligence activities and bringing investors to the deal. With my 20+ years in corporate, I was able to bring structure to the offering including building a webinar and helping coordinate lending and closing activities. Helping with the project really helped to launch my identify and brand as an investor.

What were the main lessons learned as part of this 94-unit deal?

Firstly, several of the GPs in the deal were/are highly experienced investors with very busy day to day activities and many deals in parallel to this one. Getting alignment on early decisions and engagement with the lender took quite some time to get established - ultimately this led to some delays in closing. Some of these hang-ups were outside of our control, but If I had to do it over again….I would build a comprehensive plan immediately after we enter the due diligence phase that's visible to all partners (including lender, property manager, and attorneys on both sides) with each key activity with an assigned owner and deadline for each. This structure and visibility would have really helped us push aggressively for decisions and tackling administrative activities swiftly. Not to mention this organization would have drastically reduced stress for all parties! Adding a quick 15 minute weekly touchpoint for the whole team would've been awesome as well and something I will for sure work into each deal moving forward.

Secondly, initially we engaged with one attorney to handle both the securities work and sale agreement and transactional activities. When it came time to start working on revisions for the PPM (private placement memorandum), these changes took much longer than we anticipated (due to availability of the attorney) and we ultimately had to go elsewhere to get this done and start from scratch with a new securities attorney engaged. This late in the project this was not ideal but under the timeline we were operating under this added quite a bit of stress but we did ultimately get it done! Lesson learned here is start working on your investor documents immediately after you've completed the bulk of the due diligence activities including financial reviews and physical inspections.

Finally, if you have investors using Self-directed IRA funds, factor in at least 1-2 weeks (another trust custodian told us to count on 3 weeks!) for processing and cleanup of any documentation needed. Naturally, these transfers can take a bit longer than cash accounts from a typical bank which can be wired in a matter of hours.

All of this considered, the next deal will be smoother, faster, and less stressful for everyone! The really great news is that the visibility of this project help me land a hand in another multi-family project (43 unit in Greenville, SC) which is set to close very soon. Like they say in professional (American) football, MOMENTUM is the key to sustaining a win. You also know what they saw about the "law of the first deal"…..

I hope all of you enjoyed my short story and if this has helped at least one aspiring GP on their journey, I feel like I accomplished my intentions with this article.

With 2 deals now behind me, I suppose it's time to revise my goals for the year. Here's to crushing the remainder of 2021!!

Andrew