Best way for new investors to get into MultiFamily

[Wes Mccullar]

Hello BP

My wife and I have spent the last year reading and educating ourselves on real estate investing and primarily Multi-Fam. We are now at a point where we are both just very eager and itching to get started, as I know that is by far the best way I learn is by taking action. Our long term goal is to become full time investors on a large scale and for us to retire from our W2 so we can have more freedom and time with our children and to give back to others.

Where we are feeling sort of stuck is on where we should start. Should we start out by seeking smaller Multi-Fam such as 12-24 units to get our feet wet and gain experience or should we invest a 100k passively on a much larger deal like a 200+ unit with our mentor/coach and learn that way? Which do you all feel is our best approach to getting started and gain the experience and confidence we need to scale higher in the future?

Side note: we are accredited and have very high annual income!

Thank you all for your support and guidance as we start our journey.

[Arn Cenedella]

@Wes Mccullar

Ah, this is the $64M question.
Everyone will have their own opinion. 

I think making a few LP investments to start is fine. But honestly, as an LP you won’t learn much about syndication. Getting the monthly newsletter and quarterly financials with no access to the “behind the scene effort” yields little actual knowledge in my opinion. 

Perhaps your mentor can bring you in as a co-GP on a few deals, you will learn more this way than being an LP. 

The other question is: What is your vision of the future? Do you want to be lead operator sponsor on a syndication? If so, I would suggest owning your own property and dealing with all facets of operation is probably a good idea. One learns by doing. You will learn so much more owning and operating a 16 unit property than being an LP or co-GP in a larger deal. 

And of course, it’s not an either or question. One can look for a smaller DIY deal while being an LP or a coGP. 

My path was decades as a SFR rental investor. Moved to MF a year or so ago. Started with a few LP investments. Bought a quad bought a 12 unit. Educating and networking all along the way. Did two co-GP deals and then just completed my first lead sponsor deal. Trust me, that was exciting and a huge learning experience.

I think you are in a good place to start your journey. 

Good luck

Arn