All Forum Posts by: Adrian Fajardo

@Adrian Fajardo I would get experience and scale up to larger value add multi family properties so you can consistent monthly cash flow (to cover your paycheck) and have forced appreciation to generate more capital (this is your wealth creation)

 Adrian,

Knowing what I know now (and I have been investing since 1999 and have acquired over $100M worth of properties - I own 1,000 apartment units and buy hotels also) - this is what I would do:

1. Don't start at the "bottom" but instead think BIG. Most people here on BP will suggest you start at the bottom: buy a house or a 2-4 units and do it yourself by saving enough cash. Although there's nothing wrong with those things, if you have BIGGER goals, then you have to do things differently and it starts with how you think.

THINKING BIG means you set a Big Hairy Audacious Goal. $10,000 a month is not a B.H.A.G.

$1B worth of institutional grade assets and helping 100 people along the way is my B.H.A.G.

I am not saying that you have to set the same goal as I have BUT by thinking BIG, you are forced to do things differently and your mind will go on "hyperdrive". It will think of creative ways to reach your B.H.A.G. And your mind is a powerful thing: when it thinks BIG, you will attract the right people so that you will accomplish your goals.

And this thing with B.H.A.G. is not "new age" mumbo-jumbo. It works. When I set my BHAG, I attracted the following recently:

  - several private investors who can invest $12M to upwards of $20M (and more)
  - a property owner who is retiring and he is selling me 3,000 apartment units in A areas of Cincinnati
  - a professional property management company that can manage apartments nationwide: now I can confidently acquire properties all over the country

2. Network like crazy and look for strategic partners. You're a newbie? Seek out a mentor you can work for free in exchange for learning from him or her. You need capital? Seek out people who have capital and wants a safe, reasonable return on their money. You don't have the know-how? Read books, attend webinars, seminars - start with the free ones and when you have the budget, attend the paid ones.

3. Single family homes and small multi's are good but they lack scale. Instead start with a 20-unit apartment building that needs a small value-add in the right location (has to be growing - say from a "D" to a "C" or a "C" to a "B"). How do you raise the capital? See #2. 

Value-add is very critical and for your first deal, a small value-add should suffice. Don't buy a building in an "F" area that is 100% vacant. That's just dumb and too risky. Instead, buy a 20-unit building that is mismanaged with 20% vacancy and rents that are $50-$100/month below market. Maybe it needs $3,000/unit in renovation so you can increase the rents.

Here's the power of the value-add. Let's say that property is in an area that is growing ("C" that is transitioning to a "B"). You know that when it becomes a "B" area, its cap rate will likely be 7% (or even lower). With a $100/month increase in rent...you increase the value of the building by a whopping $342,857. You refi out 50% of that (to be conservative) and now you have $171,428 additional tax-free cash you can use on your next deal.

How many houses do you need to rehab to net after tax - $171,428? You can do it with just ONE multifamily deal.

And if you think multifamily is good, hotels is even better.

I know this is a long-winded answer to your question but you ask how you can get MASSIVE wealth. 

The short answer is don't do what majority of people here on BP does and listen ONLY to the ones who have done what you want to do.