Do Multifamily Leaders truly own the reported units they tout?

Multi-Family and Apartment Investing
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Do Multifamily Leaders truly own the reported units they tout?

David C.
Investor · Member since 2021 · 131 posts · 100 votes

This may sound like an odd question, but so many times we hear that (insert name) has gotten up to 1100 units, or has a portfolio containing $400M in multifamily real estate.  But how many of these folks only "co-own" these properties?  


For example, Guru X states that "he/she is up to 1100 units".  Does this mean that they actually own each of these 1100 units themselves, or does this mean that they are involved in multiple deals, where the total 1100 units are actually owned across *all partners* within these deals(thus exaggerating the true ownership of the individual)?  It may seem like splitting hairs, but this certainly makes a difference to me.  Any thoughts?

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Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
5y

I “own” all of the Fortune 500 companies by virtue of my small index fund investment.

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  • Charles Seaman
    Apartment Syndicator · Charleston, SC · Member since 2017 · 519 posts · 631 votes
    5y

    @David C. Many of them own a percentage of those units, but they don't own the units outright.  It takes a lot of money to control that type of portfolio outright.  But it's no different than any other money manager that uses other people's money to acquire assets.

    3Reply
  • David C.
    OP
    Investor · Member since 2021 · 131 posts · 100 votes
    5y

    @Charles Seaman  Thank you for that clarification.  I had a feeling that this was the case, but it almost seems as though it sounds much more impressive when someone says that they own X amount of units or $YYY million dollars within their holdings.  To me it would be far more accurate to tout the actual equity or say that I am "partnered in ownership of 1100 units".

    4Reply
  • Bryan MitchellPro Member
    Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
    5y

    @David C., I feel the same way. It’s a bit disingenuous or misleading when they say this. They could do a better job explaining themselves. Clearly raising funds and finding deals is an acquired skill set that should be compensated well. I’d add the gurus you speak of are excellent at self promotion much like other highly successful people in different venues. 

    2Reply
  • E. C. "Stony" Stonebraker
    Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
    5y

    @David C., many of the operators more accurately express the units or dollars as AUM or Assets Under Management.  This is a clearer way of being accurate and transparent.  Virtually no operators own the 1,000s of units and $ millions outright, so it is not dishonest or misleading because it is basically an industry standard metric.

    What is misleading and not as honest is when an operator includes their LP investments mixed with their GP investments in their totals.  You should ask the operator if their number reflects AUM or if it includes any LP investments.  

    There are other roles people can play in the deals that may be limited, yet the person can count the deal in their numbers because they are technically a GP in the deal.  This just means if there are 8 GPs in a $10 million deal, eight different people can claim to have $10 million in AUM.

    4Reply
  • Tushar P.
    Member since 2019 · 332 posts · 171 votes
    5y

    Don’t even have to be a dishonest GP/syndicator to claim that. Anyone who owns just a single share of a diversified reit can claim they own tens of thousands of properties 😏

    3Reply
  • E. C. "Stony" Stonebraker
    Rental Property Investor · Coral Gables, FL · Member since 2016 · 199 posts · 266 votes
    5y

    @Tushar P.  That's a different story.  Owners of REITS don't own any real estate.  They own shares of stock in a company.  The company owns the real estate.  

    GPs and LPs own an actual % of the property(ies) they invest in as proven by the K-1 tax statement they file with their tax returns every year.  When they drive by the property, they can say I own X% of that property.

    Now, they can claim what you say, but that is completely misleading.

    3Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    5y

    They should stop saying “own”, they don’t own that many properties. MAYBE you could say you own units that you own 50% of. But 1% of 1000 units is less impressive that owning 20. 

    Same thing comes up all the time with loans and price points. People who own 20 doors and it turns out it’s five $140k fourplexes. and they have a loan for 80% of the purchase price. Compared to the guy/gal that only owns one 4plex in Maui/LA/San Fran or wherever. 

    Maybe it’s a Midwest thing but when people ask how many homes I own. When I tell them I purposely bring up that the bank owns part of two of them. (Maybe that’s a point of pride though since they used to own part of all of them. )

    7Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @David Cozzi

    Ego is the enemy

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  • David C.
    OP
    Investor · Member since 2021 · 131 posts · 100 votes
    5y

    @Bill B. @E. C. "Stony" Stonebraker  @Bryan Mitchell 

    I agree. Especially for newbies, this can be very misleading and can lead to them pouring money into syndicators who have far less experience when you break down what they actually have done. In fact, I was just on a business call last night with a representative of a well known REI coaching service within the multifamily and syndication arena. When I actually found out what the actual acquisitions track record of the individuals were, it was far less impressive than what I felt it was built up to be.

    3Reply
  • Bryan MitchellPro Member
    Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes
    5y

    @David Cozzi, yes it’s important that you vet all individuals or organizations to include those involved in syndications. That’s what being a truly savvy investor means. Engaging critical thinking skills while doing an comparative analysis of like products and organizations. Well done.

    2Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    5y

    Social media and other sites are overwhelmed with the "look at my success" crowd. I've challenged some before about the lies of "I own 150 doors" when in fact they own 1.5% of 150 units. These folks know that few will ever vet these statements which makes it easy to continue to be pretenders. My philosophy is this...if someone has to lie to get your business, nothing will change once they have it. In real estate and and in life, believe none of what you hear and only half of what you see. 

    9Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    5y

    @David C., the claim of "ownership" sprouts from four different seeds:

    1. A Centimillionaire or billionaire who owns X units or $X themselves.  You'll almost never hear them talk about how much real estate they own, nor selling courses on real estate, nor bragging on an internet forum.  In fact, they probably don't even know what they own because they most likely established a family office and have a staff in charge of it.

    2. A person who has invested anywhere from $10,000 in one 50-unit deal to twenty investments (or even more) of $100,000 each (or even more) in 250-unit (or even larger) apartment syndication offerings.  They might be inclined to add up the total unit count or value of all of that real estate and claim to "own" X units or $X of real estate.  But in all likelihood, they have no control over any of it and make none of the decisions.  This is investment experience, not real estate experience.

    3. A person who is in charge of a real estate syndication firm.  This is someone who buys real estate using the money raised from groups #1 & 2 above.  This person is responsible for making sound real estate investments and making sound decisions on behalf of their investors.  In the eyes of the law they "own" all of this real estate because they have total control over it.  The investors funded it, so they all own shares in the company, but it is the company that owns the real estate.  Claiming to own X units or $X is most likely legitimate if in fact the person you are talking to is actually in control of the company and makes the decisions.  If you aren't talking to the decision maker, that person should be saying "the company owns..." rather than "I own..."

    4. People affiliated with a real estate syndication firm in some way.  Their only role might be to raise capital, or they might have other duties such as acquisition, underwriting, asset management, etc.  They likely don't control the investments, and may or may not even have a vote.  Many of these affiliates claim to "own."  Often, this is a thinly-veiled claim.

    If you are a prospective investor in real estate syndications, you probably won't be talking to group 1.  Group 2 is a valuable resource for you because they might be able to make recommendations for good sponsors to invest with and bad ones to avoid.

    I think where your question lies is in distinguishing groups 3 & 4.  Often, people in group 4 present the optics that they have more control than they do, or more involvement than they have.  I suppose that can best be defined as "marketing."  

    If you are looking for a way to sort the wheat from the chaff, ask this simple question:  "When this property sells, who will sign the deed?"  That will tell you who is really in charge.  

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    10Reply
  • AJ ShepardPro Member
    Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
    5y
    Originally posted by @E. C. "Stony" Stonebraker:

    @Tushar P.  That's a different story.  Owners of REITS don't own any real estate.  They own shares of stock in a company.  The company owns the real estate.  

    GPs and LPs own an actual % of the property(ies) they invest in as proven by the K-1 tax statement they file with their tax returns every year.  When they drive by the property, they can say I own X% of that property.

    Now, they can claim what you say, but that is completely misleading.

    I don’t believe this to be true.  When you invest in a syndication as a LP or a GP you are investing in a company.  The company owns the real estate and reports a K-1.  Which is a lot more similar to reits than owning property.  The company is typically a pass through which is why there are depreciation losses as well as income.  It is possible to 1031 out of a syndication but typically the entire partnership needs to participate.  But the reason that this process is difficult is that the company is dissolving upon disposition.


    As far as Units owned it’s a tough metric to measure in case of talk above.  If you’re really into how much a syndicator actually owns, request a copy of their real estate schedule owned that they have to provide to lenders to qualify for loans.  A lot of people really believe that tracking net worth is a lot more reasonable metric when comparing.   

    2Reply
  • David C.
    OP
    Investor · Member since 2021 · 131 posts · 100 votes
    5y

    @Brian Burke

    So very well put.  I can't thank you enough for the outline - This was fantastic.  

    I'm not sure if I will get beaten over the head by BP for mentioning this, but I purchased your book "The Hands-off Investor" and it was absolutely fantastic!  Packed full of valuable information from soup to nuts.  It was clear, detailed and concise.  I have referred back to it several times as I enter the multifamily arena and syndication investing.  Thanks for writing it!

    (Disclosure: I have no financial gain/ties to Brian Burke other than to say that his teachings are fantastic!)

    3Reply
  • Bryan Hancock
    Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
    5y

    I “own” all of the Fortune 500 companies by virtue of my small index fund investment.

    9Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @David C.:

    This may sound like an odd question, but so many times we hear that (insert name) has gotten up to 1100 units, or has a portfolio containing $400M in multifamily real estate.  But how many of these folks only "co-own" these properties?  


    For example, Guru X states that "he/she is up to 1100 units".  Does this mean that they actually own each of these 1100 units themselves, or does this mean that they are involved in multiple deals, where the total 1100 units are actually owned across *all partners* within these deals(thus exaggerating the true ownership of the individual)?  It may seem like splitting hairs, but this certainly makes a difference to me.  Any thoughts?

     You are correct in your assumption. You are not here splitting hairs. There is a whole lot of exaggeration going on in the forms and elsewhere. 

    0Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Bryan Hancock:

    I “own” all of the Fortune 500 companies by virtue of my small index fund investment.

     😂😂😂😂

    0Reply
  • Michael Ablan
    Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @David C. - It takes a large team to pull off anything of significance in this industry.   

    Some people build it (and should own it).  Others join it (and get to be part of it).  

    0Reply
  • Sam Shueh
    Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    5y

     Most of the apartment bldgs belong to a llc. At title company often the notary tells you he has to chase 35 signatures to close a deal.  Does that make sense?

    1Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Sam Shueh:

     Most of the apartment bldgs belong to a llc. At title company often the notary tells you he has to chase 35 signatures to close a deal.  Does that make sense?

    Sam you said so much in such a short few sentences.

    0Reply
  • Reginald Ross
    Rental Property Investor · Gulf Shores, AL · Member since 2019 · 107 posts · 115 votes
    5y

    @David Cozzi

    As a syndicator myself, I typically report assets under management and units owned by the collective ownership group .

    Every deal is structured slightly differently and the primary GP group is a trio.

    We don’t dive into the equity split minutia because we each have personal holdings, real estate that we purchased as an operating entity with various percentages PLUS real estate that we bought together with co-sponsors.

    It turns out to be an odd number with decimal places that just seem unnecessary to report (e.g. we own an average 25.6% interest in 347 units).

    I don’t include co-GP holdings because that can skew the numbers too. For example, one of our co-Sponsors owns an interest in over 2,000 units but my trip doesn’t report that on our website because to us, that seems disingenuous.

    I agree that some use the unit count as puffery but we just assume that most people understand the nuance.

    0Reply
  • Alan Ouellette
    Member since 2021 · 44 posts · 27 votes
    5y

    @David Cozzi

    In all honesty, almost no one outright owns a property. Anything with a mortgage might not even really be "owned". Someone who just bought a sfh and put their 20% down, is a minority shareholder in the property even though most would call that person a homeowner.

    A lot of the Big Boy investors are highly leveraged so they may control 1000+ properties, but no, they don't own them in the real sense of the word.

    1Reply
  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    @Alan Ouellette right you are, another way to think of it is “who owns the income stream and equity?” The building is a vessel for both

    1Reply
  • Carlos Gonzalez
    Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes
    5y

    @David Cozzi

    Depending on the structure, for the most part they own a % of the rent income, fees of all kinds, and a % of the disposition of the property if they make a profit.

    1Reply
  • Justin Goodin
    Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
    5y
    Originally posted by @David C.:

    This may sound like an odd question, but so many times we hear that (insert name) has gotten up to 1100 units, or has a portfolio containing $400M in multifamily real estate.  But how many of these folks only "co-own" these properties?  


    For example, Guru X states that "he/she is up to 1100 units".  Does this mean that they actually own each of these 1100 units themselves, or does this mean that they are involved in multiple deals, where the total 1100 units are actually owned across *all partners* within these deals(thus exaggerating the true ownership of the individual)?  It may seem like splitting hairs, but this certainly makes a difference to me.  Any thoughts?

    This is a great question and something I had a hard time understanding when starting out. Just to echo what everyone else has already mentioned, they do not outright own the assets. 

    Multifamily is a team sport. There are many ways to split the pie, or in this case, join a general partnership. All of these people that claim to own X multifamily doors are claiming they are involved one way or another in the general partnership. You could join the general partnership of a deal by finding it, raising capital, signing on the loan, etc. You may not 'own' the entire deal but you own a % of the general partnership.

    I personally think the number of doors you own is irrelevant. It can certainly gauge your level of experience in some cases, but sometimes you can own 1% of the GP on a 300 unit project. 

    0Reply
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