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Starting in Multifamily Property Investing
Hello all!
I am new to BiggerPockets and real estate. I have recently attended a multifamily mindset weekend seminar on the basics of investing in multifamily properties. The focus on investing was following the syndication model, in which the audience learned how to be a part of the GP team and we were taught on how to look for the appropriate LPs. I am quitting nursing school while in my final semester because I truly believe that real estate (specifically multifamily) is my path. I enjoyed learning about the underwriting while undergoing the due diligence process of securing a deal.
I would love to hear advice from the biggerpockets family on how I should start my journey. I wanted to join the mentorship program that was being offered at the seminar but $40K is not something I could cough up easily. I work as a W2 employee making $17/hr. I have the motivation and dedication to pursue real estate. My first step is to listen to the amazing podcasts that are offered right here and I just finished listening to a podcast with Sarah Weaver and would love to be in her shoes in the near future.
What should my next step be? Some advise me to get my real estate license and others don't. I was also advised to get my mortgage processing license to be able to get my feet wet in the real estate world but it's not in the multifamily realm that I wish to be in. Please help! I would appreciate your responses! Thank you all.
Honestly, I think it would be foolish to quit nursing school so close to the finish line. (I know that is not what you wanted to hear.)
Developing an investor base and finding a good deal to syndicate can take a very long time. You need to be able to put food on the table in the mean time. You can probably make more money as a nurse than you can as a mortgage processor or selling single family homes (unless that is a true passion).
Most people get into syndication while they have a W2, myself included. Even if it is not your passion, a nursing degree is a nice fall-back position with which you can make a nice living while moving toward real estate investing.
Quote from @Greg Scott:
Honestly, I think it would be foolish to quit nursing school so close to the finish line. (I know that is not what you wanted to hear.)
Developing an investor base and finding a good deal to syndicate can take a very long time. You need to be able to put food on the table in the mean time. You can probably make more money as a nurse than you can as a mortgage processor or selling single family homes (unless that is a true passion).
Most people get into syndication while they have a W2, myself included. Even if it is not your passion, a nursing degree is a nice fall-back position with which you can make a nice living while moving toward real estate investing.
Thank you for taking the time to reply to my post. I've been working in a hospital for the past 8 months as a pharmacy technician and I have seen every type of nurse there is (bed side, ICU, NICU, PICU, OR, labor and delivery, IMC) and I realized it's not for me. Of course there is money in the field but going into nursing is not for the money but for the patient's needs. I realized that working in the healthcare field, it's very quick to be desensitized because of how overworked we are. It is so easy to be burnt out, especially the first year. I currently am in a BSN program where it is required to pass an Exit Exam and I've taken it 7 times already (I was supposed to graduate last year in the spring). Being a person that believes in God, things happen for a reason and so me not graduating in time is his funny way of showing me to consider other career paths. I am taking the exam one final time to earn my bachelor's (even though it's foolish to think that one exam makes or breaks my bachelor's degree after earning all the required credits).
Nonetheless, I appreciate your advice and you did get me thinking to keep going. :)
@Katherine D. Marin Finish your nursing school as mentioned. Always worth having multiple options.
I strongly advise you to do a lot more research into syndication as well as the many other investing models out there. I would even build some funds and invest into one of these models before you consider running one. Better yet invest in a multifamily property which you manage. This will not only help build your brand and credibility, to potentially go into syndication, it will show you what you are good at and what you like or dislike.
In my opinion, syndication is the far more difficult route then nursing school. Finish the school, work a few years building income, secure a few properties with some good W-2 long term debt and learn some lessons about managing properties. Then make a decision. Just my opinion of course!
Hi @Chris Levarek,
Thank you for taking the time to respond to my post. I am currently listening to Brad Turner's podcast, "How to Buy your First, Second, or Third Rental Property." I hadn't thought about investing in real estate on a smaller scale such as rental properties. I now think that should be my first step in creating my portfolio. I was able to network with many people this past weekend and I created 2 strong connections in which they are willing to partner with me. I just do not have the type of real estate experience that they currently have. Brandon suggested to create a "rare and valuable skill," in which I intend to do now. I have joined the PRO BiggerPockets family and will use the Rental Property calculator to learn how to analyze deals as my next step.
Hey @Katherine D. Marin,
That's awesome that you got that motivation to make a big leap of faith after a boot camp! I actually started investing (or got on the path to investing) after going to a 3 day boot camp years ago. I didnt realize I could own something like an apartment building and ultimately not work for someone else through real estate until I attended that event.
Major steps in that direction would be learning all of the in's and out's of multifamily. Bootcamps, meetups, mentors, coaches, masterminds, books, podcasts all put you on the right path. I would search out people that are doing exactly what you want to do, something you appear to be doing on BP and learning from them. Syndication isn't the hardest thing but it does take a lot of time, connections and a great team of helpful and knowledgeable people. Prior to completing my first syndication I JV'ed on two deals which really helped me learn the ropes. Being a GP is a large responsibility, people are trusting you not to lose their hard earned money and to hopefully, ideally, make them some good money too.
It sounds like you enjoyed the analytical portion of underwriting, same here. I would be calling brokers and UW'ing as many potential deals as you can. Learn what expenses are in your markets of choice and how to find winning deals. All of this takes time, especially finding great deals in the crowded market we are in right now. Build relationships now for deals in the future - near and far.
I went to school for engineering, I'm still an engineer but like many on BP, want to do RE full time. I still haven't made it there, although close I haven't quite made it to the cash flow level that I need and want for financial freedom from the W2. Based on my experience I would also recommenced getting the degree, unless you have a big savings that can hold you over for a while while getting into real estate, remember its a long game.
Good luck and enjoy playing the RE game!
Multifamily is a very exciting industry and I can feel your enthusiasm. There are some very educational and supportive programs out there, but there are also a lot of sales products wrapped up nicely with a bow on them.
There are so many FREE resources that you can learn from before making a significant investment.
Bigger Pockets Forums
Multifamily Podcasts
Audible books
Facebook groups
Youtube videos
Local and virtual Meetups
Old fashioned paper books
Until you've maxed out your learning in each of these areas, or at least 80% maxed, you shouldn't be spending your money on high-ticket programs.
Good luck @Katherine D. Marin!
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I remember early in my education just wanting to quit and dive full into real estate. Work hard, continue to be educated, find mentors and within a short period of time you will be able to do just that. This can happen very quickly, especially if you don't have kids.
So, how do you start your journey? Find mentors. You can pay someone $10-$50k, you can meet people on BP and at conferences, you can work for an investment firm or you could do all three. The number key to success with mentors is adding value to them and actually doing what they say. The clients that I mentor that have success are the ones taking action. I ask them to read 3 books and they read those 3, plus 3 more. I ask them to underwrite 5 deals and they underwrite 15 deals.
Speaking of relationships, while you are working your job, be really dedicated, friendly and willing to help. Use this as an opportunity to build credibility on your character with other nurses and Doctors around you. Make friends with them. As you start getting ready to do your first deal or after your first deal, start sprinkling in conversations about what you're doing. Do it right and many of these people will be your investors.
The next way is to really understand what you are best at and focus on that. Find others around you to fill in your weaknesses, through partnerships and relationships with brokers, property managers, lenders, etc. For partnerships, try to find people that compliment you and that are at or above your level. Finding someone that has some experience, can be a huge asset.
Here is an article that I wrote that may help you out: https://www.biggerpockets.com/...
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Quote from @Katherine D. Marin:
Hello all!
I am new to BiggerPockets and real estate. I have recently attended a multifamily mindset weekend seminar on the basics of investing in multifamily properties. The focus on investing was following the syndication model, in which the audience learned how to be a part of the GP team and we were taught on how to look for the appropriate LPs. I am quitting nursing school while in my final semester because I truly believe that real estate (specifically multifamily) is my path. I enjoyed learning about the underwriting while undergoing the due diligence process of securing a deal.
I would love to hear advice from the biggerpockets family on how I should start my journey. I wanted to join the mentorship program that was being offered at the seminar but $40K is not something I could cough up easily. I work as a W2 employee making $17/hr. I have the motivation and dedication to pursue real estate. My first step is to listen to the amazing podcasts that are offered right here and I just finished listening to a podcast with Sarah Weaver and would love to be in her shoes in the near future.
What should my next step be? Some advise me to get my real estate license and others don't. I was also advised to get my mortgage processing license to be able to get my feet wet in the real estate world but it's not in the multifamily realm that I wish to be in. Please help! I would appreciate your responses! Thank you all.
My advice would be to finish nursing school. Only 1 semester left?
Most need a good w2 to save and invest. Commission 1099 income like agent or mortgage sales take time to build.
We can learn syndication guru secrets on the side. Certainly don't pay for some program!
Love the ambition! I would recommend keeping your W2 while you work on scaling the real estate business. It took me 3 years of doing both to be able to go full time in real estate. That being said, syndication is a great way to scale! The path I took to get into syndication was becoming proficient in one piece of the process and partnering with other GP's that were strong in the other pieces. I chose underwriting as my path of expertise. After 6 months of learning and networking I was able to complete my first syndication deal as a GP. Good luck in the journey!
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@Katherine D. Marin, I am going to give you another reason to not quit nursing school. If you finish, and take a job in nursing, who will a big part of your coworkers. Yes, other nurses, but who else? Who will you be interfacing with everyday?
DOCTORS
Who are high earners, often times also looking for a way out sooner rather than later, but have not time to source, underwrite and manage deals? DOCTORS
If real estate is your calling, I would 100% finish nursing school and make every effort possible to network with the doctors. Show them you not only are a great nurse, but also someone who wants more in life through real estate. This is a built in investor pool, assuming you are tactful with your interactions. And as Greg noted, it can take years to get your first deal, and you will need money up front.
On that last point, many would be syndicators don't seem to understand the timing of the cash flow. Yes, a successful syndication will raise equity from outside LPs to cover most all of the partnership's costs, but there is a lot of money to be spent prior to any money coming in from LPs. Maybe the other partners will cover those initial costs, but you have formation costs/legal bills, marketing costs, website, software, email accounts, etc. But the big one is your earnest deposit on a property. Let's assume you are looking at an $8mm property. Typical earnest is 1-2%, so anywhere between $80k and $160k, but I have heard of deals with up to 10% earnest, hard on contract signing.
But using the 1% amount: you and your partners are likely in this deal $100k+ between legal fees, earnest, and typical business setup costs before you are able to raise a dime from outside investors.
I tip my hat off to you for tapping into your faith and taking a broad view of what your life would be like at your current workplace if you were to stay in the field long-term. Having that vision is key and I can tell its what currently fuels you to reach for more.
That said, I agree with many of the BP members here encouraging you to finish off your last semester/exam to complete what you've started. I used W-2 income from jobs that I wasn't passionate about to get into my first property and it turned out to be the best decision I've ever made. Eight years later, I left my full-time job (@ a hospital) to jump into RE full-time.
Everyone's goals are different and your path may very well be directly leading your towards syndication. Take this time to build the foundation!
I'd advise using that W-2 income (after you pass your exam the next time around!) to buy multifamily properties to house-hack over the next 3-5 years at least. As mentioned on a previous post, manage the properties yourself to gain valuable experience which will be helpful down the road.
While investing, attend local RE investing groups/meet-ups to build as many quality relationships as possible. If you're unsure how to do this, check out BP's Events section for local meetups (eventbrite and meetup.com are good as well). Connect with local professionals (Realtors, lenders, investors) who can introduce you to their contacts and teams.
Best of luck to you on your journey!
Abel
-
Real Estate Agent NY (#10401295960)
Quote from @Evan Polaski:
@Katherine D. Marin, I am going to give you another reason to not quit nursing school. If you finish, and take a job in nursing, who will a big part of your coworkers. Yes, other nurses, but who else? Who will you be interfacing with everyday?
DOCTORS
Who are high earners, often times also looking for a way out sooner rather than later, but have not time to source, underwrite and manage deals? DOCTORS
If real estate is your calling, I would 100% finish nursing school and make every effort possible to network with the doctors. Show them you not only are a great nurse, but also someone who wants more in life through real estate. This is a built in investor pool, assuming you are tactful with your interactions. And as Greg noted, it can take years to get your first deal, and you will need money up front.
On that last point, many would be syndicators don't seem to understand the timing of the cash flow. Yes, a successful syndication will raise equity from outside LPs to cover most all of the partnership's costs, but there is a lot of money to be spent prior to any money coming in from LPs. Maybe the other partners will cover those initial costs, but you have formation costs/legal bills, marketing costs, website, software, email accounts, etc. But the big one is your earnest deposit on a property. Let's assume you are looking at an $8mm property. Typical earnest is 1-2%, so anywhere between $80k and $160k, but I have heard of deals with up to 10% earnest, hard on contract signing.
But using the 1% amount: you and your partners are likely in this deal $100k+ between legal fees, earnest, and typical business setup costs before you are able to raise a dime from outside investors.
I did not know you could get a commercial loan mortgage with only 1-2% earnest money. When I shopped for my mortgage, I was told to put 20% down.
Hey @Evan Polaski,
Thank you so much for your response. After reading everyone's feedback on my decision to quit nursing school I am rethinking my decision, I am retaking the exam I need to get my bachelor's degree in about a month and a half for the 8th time. I do not have much time left to finally pass the exam and then take the licensure exam after that. However, I am feeling more pumped and energized to retake this exam for the last time and pass it. It has been a challenging year trying to overcome with the negative mentality. Nonetheless, as a pharmacy technician in an hospital I already have met a pharmacist that invests in real estate and he and I get along very well so he is definitely going to be a great LP in the future. Thank you again for your advice.
Hi @Abel Curiel,
Thank you for your response! You are definitely not the only advising me to stay with my W-2 job even if I don't like it just so that I can save enough money to invest in my first property. I'm glad you mentioned BP's events because I am a new PRO member so I haven't learned all the ropes in the site. I will look into that. I am attending my first networking event after the 3 day seminar I attended 2 weeks ago this upcoming Wednesday with Dade Real Estate Investors Association and I am excited to be able to network with the investors in attendance. Thanks again!
Hi @Steve Vaughan,
Thank you for your response. You are certainly right about not paying so much money for a program that teaches the same information that I can find through BiggerPockets, books, youtube, etc. Funny enough, I learned about BiggerPockets through the 3 day seminar I attended. Nonetheless, I am excited to continue with RE.
@Katherine D. Marin Not to hound what basically everyone has said about not quitting nursing school, but I would definitely agree with them. I am a BSN and originally planned to go back to school to become a CRNA. After my first year of nursing, I found out about real estate investing and have since decided going back to school is not for me. I keep telling myself that if I were to start off again with my knowledge now, I might have gotten my real estate license straight out of high school, and went FT into the world of real estate while I learn.
That being said, I do not regret becoming a nurse. As you stated, it is easy to get burnt out and nursing definitely is not for everyone, but it is difficult to get the full picture of nursing and the value you can bring to patients unless you have actually worked as a nurse, not just seen them at work. God could be telling you that you should consider another career path, but this could also be His way of encouraging you to lean on Him through this challenging time while He tries to teach you something that could help you later on down the road (obviously I can't tell you what He is telling you, just food for thought).
But the connections you make and stable career can definitely help your investing down the road, so I encourage you to check out some study tools and feel free to reach out if you need anything! You got this! The "High Stakes Testing" definitely is messed up when it comes to graduating, the only test that truly matters in the NCLEX.