Thanks guys and gals. Haven't been on BP in a while. In response as a follow up and we close out 2016, my second year as an apartment investor. It's not as impressive as you may think, I'm embarrassed to say I'm pretty lazy and haven't done a deal on my own because of laziness and a little bit of lacking the courage. I know I could do one on my own, and have made several conservative offers, just need to get over that hump. Took that 4 hour work week very literal.
I've invested in one more deal (120 doors) since last post, and have two more closing in January with another sponsor I have gotten to know and trust, (108 and 346 doors to bring us up to 8 complexes or 1207 doors to date by Jan '17). It would be a lot more if we had the cash to do more, but there comes a time when we have to wait for some of the capital to come back in the form of a sale or refi, so we can get into more deals. I passed on dozens of deals and didn't always go for the ones with the most doors, but went for the higher IRR potential. This is all from having personally networked with a great group of like minded investors here in DFW. I look forward to meeting many new investors in 2017, if you are in the DFW area and want to know when or where the best network events are happening, just ask. I'll work on my 2017 goals over the next couple weeks, but it will probably be more on physical and mental improvement, as that is something I have neglected lately, and want to save cash for my own deal, as I'm probably done with being a passive investor for a while, but at least have Fannie Mae cred now.
The only work I have had to do is go to network events and tour apartments, and create relationships with these investors at our local meetups and other network and education events. It's not work when you enjoy what you are doing. Networking is done so we could become partners with these investors by having that "pre-existing and substantive relationship". This is a rule the SEC wants us to have in order to be partners in the syndication. That said, no offense to requests to partner up, but unless we have a beer together, I probably won't partner with you.
I have seven different deal sponsor groups, that I have got to know, share stories and have a beer with and I trust will do a good job in managing the eight assets. By investing in eight different markets that we have researched as strong and stable markets for growth and stability, this spreads our risk, and is my way of diversifying. None of these folks knew me prior to a few years ago, so this is from just showing up and talking with people, which is something I have to force myself to do. It does take some work to get people to let you in their inner circle, but when you are a serious investor that knows what they want, and they know you want to work with them, it brings that barrier down.
I'll say it again, but it takes getting education from good mentors that have done this successfully and practice what they preach, and it doesn't have to remain one person, as you could find many mentors to learn from. It doesn't have to be from a high dollar guru, but somebody that you can relate to, or learn from that is not just pitching workbooks and crap information. But to work with a mentor you have to bring value or pay for their services. Business relationships in general need to have some sort of value from each side. I have money, he has time to find the deal, she has Fannie Mae experience, we can all team up. But you got to have something to bring to the table. To this day I am constantly learning, reading, listening to podcasts, and looking at financials of deals for sale, creating relations with apartment owners, buyers, brokers, property managers, inspectors, insurance, and bankers. Also, was able to meet up with guys from Fannie and Freddie at an event put on by one of our awesome lenders, so they know my face when I do make an offer and I get to deal with them in the future.
@Nick Tiedt Can't give any stock strategy, still learning how to play in that Wall Street casino, ya win some and you lose some, just try to win more than you lose. My year one is a bit misconceiving, because I have spent many more than one year on just real estate education, and am a former agent. But to pin down my year one from late 2014, when I would say was when I decided to get out of the wine business I owned, and get into full blown investor mode. I went to REI meetings, and ultimately joined an investor group two years ago, who only focused on multifamily. Too many REI's get me all messed up because they weren't focused on one thing, and I knew I wanted to focus on multifamily. My ADD kicks in high gear if I am not able to focus on one thing at a time. I went to as many network events as I could fit into my schedule as a Dad and soccer coach. Lucky to have a wife that supports my ventures and keeps a stable job. I took action quickly when I knew what I was doing. You'll hear me and many others say these same things over and over, but it is true, get education, find a mentor, and take educated decisive action.
I think I covered what the range of these investments are, but these deals I am in are $25-100k minimums. Having built relationships with all of these deal sponsors and them understanding who I am, there has been a time when I wanted to be in a deal badly, but didn't have their set minimum ready to deploy, so they let me in at a lesser amount. That wouldn't happen if they didn't know who you were. You can make a good guess at what we have invested and understand it takes some decent amount. If you have an IRA you can do this with a Self Directed account at one of many custodians, but cash is always king. If you are serious about it, you will find a way to get it done.
Side rant. I grew up as the oldest of five then another five including half and steps, in a poor lower mid class family. I had to start working at a young age selling candy, baseball cards, vitamins, water filters, whatever to make enough to help feed the family and buy my own socks. I dropped out of college, while working full time, making more than my parents as a 20 year old, bought my first house at 22 which became a rental, bought my siblings first cars, helped them through college, and have been helping my parents for a few decades. I say this so you know I didn't come from money and wasn't handed anything. I've been married for 16 years and we saved as much as we could for 15 years before getting into apartments. I like taking money out of the stock market as we ride the Dow up to 20k, and placing it in hard assets, that are conservatively underwritten, bought right, and will do fine even in a bad economic downturn. We've been burned bad in the last few down turns so I don't want to take another big ride down with all of our savings, we are still in the market but I feel a lot better about our diversification. I still want to buy part of an income producing farm of some sort. Can you tell I have ADD. If you know what the VIX is, it just hit a 16 month low today around 11. The VIX is the volatility index, and is a barometer of complacency. How long will it stay this low? When will we get a big pullback? Remember sell high, and buy low, but opposite of that when looking at the VIX and you'll be better off with your money in the stock market. The market is up 9% since the election. Will we keep riding up, possibly so with good reforms on corporate taxes. But remember all it takes is one snowflake to hit the mountain slopes to create an avalanche, and you never know which snowflake it will be.
Merry Christmas, Happy Hanukkah and Happy New Year! Cheers!
