Failing My Way from 0 to 100 Apartments in Less than a Year

Last Year in January, my business partner and I decided,that we would start buying larger multifamily deals.  We made big plans; we would buy our first deal before the end of the first quarter and would end the year with more than 100 apartment units. 

What actually happened is we looked at a lot of properties made some offers and didn't get anything under contract until mid 3rd quarter, and didn't close the first deal a 12 unit until September.

We did however end the year fairly strong with me and another partner buying that first deal and with us partnering to buy a second deal, 19 unit in November.  

Anyway you look at it, we failed miserably at our goal.  This is not to say that acquiring 31 cash flowing units in less than 12 months is failing, its definitely a good start, but its not 100 units and so we failed to meet our goal.  

We did however, learn some things along the way and I am super confident that we are going to make it to well beyond 100 units before the end of this year.  

The first thing I learned is that buying apartment buildings is not the same as buying smaller properties.  I mean I knew that from listening to the podcast and also from reading a number of good books on the topic but what I didn't know is that brokers are very important.  

We rarely use agents or brokers when buying or selling our single families or duplexes.  However with the apartment complexes you really cant just jump on Loopnet or any other site and expect to make offers that will be accepted. Sellers rarely list their own properties and the listing brokers don't take offers from unknown buyers very seriously.  

You need to find yourself a good broker and then you need to make sure that broker knows you are serious.  Which is to say, they need to believe you have the funds and the experience to close the deal. That way the broker can convince the seller or the sellers agent that you are a serious buyer.  

The second thing I learned was its expensive, like very expensive.  You really do need to put 25% to 30% down if you want to finance these types of projects.  ( I don't think its reasonable to do the no one down thing, at least not until you have done a few and you can get to syndication and even then you will still likely put some chunk down).  

Most these types of deals are at least 500K (ours were both more than that amount) so you are going to need to have at least a couple hundred grand available before you can take one down. 

Lastly,  Its okay that we didn't get to 100 units.  We learned a lot and our next deal is in process.  Next month, we will likely close on a 32 unit (currently under contract) and we have identified another 48 units that we are going to make a serious play for, so by summer we actually could be over 100 units and since we didn't buy our our first deal until September I am going to call that a win.  We really might have been able to fail our way to 100 units in less than a year!