All Forum Posts by: Erica K.

My First Multifamily Full Cycle Success Story: From Busy Attorney to Real Estate Investor

I’m thrilled to share the complete journey of my first real estate investment—a 44-unit multifamily property in Lawrence, KS—from acquisition to exit.

Balancing a full-time legal career and fatherhood, real estate seemed like an impossible dream. But in late 2019, I set a bold goal: close my first deal in 2020. Through relentless self-education on platforms like BiggerPockets, networking like crazy (over 200 Zoom calls in 2020!), and joining a mentorship/mastermind group, I bypassed smaller deals and jumped straight into multifamily investing.

Shortly after the purchase, I shared my journey on BiggerPockets (www.biggerpockets.com/forums/88/topics/921192-my-first-ever-44-unit-mf-apartment-closed-in-dec-2020#p5370534), and the community’s support was incredible. Now, as I exit this investment, I’m excited to revisit this journey with you 3 years and 8 months later.

Acquisition:

In December 2020, I closed on the 44-unit property for $1.725M. This was a massive leap for someone with zero prior real estate experience. I had to crush limiting beliefs—like thinking I needed to start small or that investing out of state was too risky. Surrounding myself with like-minded partners and mentors was key to taking this first big step. Again, you can check out the detailed post I made on BiggerPockets after closing clicking the above link.

100% Cash-Out Refi:

By April 2022, our hard work began to pay off. Through strategic renovations and tenant management, we forced appreciation, increasing the property’s value to $3.4M according to the lender’s appraisal. This enabled us to execute a 100% cash-out refinance, returning all initial capital to investors while still generating cash flow. We all know what this means: infinite returns! On top of that, we transitioned the loan from a community bank to a Freddie Mac agency, making it non-recourse—a significant upgrade.

Exit:

Today, on August 15, 2024, I’m proud to share that we sold the property for $3.15M. My initial investment was fully returned during the refinance, and the sale has provided an additional return, bringing my equity multiple to over 3X. This journey has been a testament to the power of action and perseverance.

Key Takeaways:

1. Education is Essential: Invest in your knowledge and seek guidance from experienced mentors. Joining a mastermind/mentorship program was a game-changer for me.

2. Partnerships Matter: Align yourself with motivated, positive people who share your vision and work ethic.

3. Take Action: Don’t just learn—apply what you know. Network, underwrite deals, and practice your pitch until you discover your role within a team.

4. Enjoy the Journey: Real estate is a marathon, not a sprint. Fall in love with the process, and success will follow.

Reflecting on the Journey:

What happened to me during this full cycle, including the 3-4 years of the pandemic as a RE investor?

• I became a GP in 21 multifamily syndication/JV deals — one of which was sold today.

• I hosted monthly multifamily virtual meetups and in-person meetups in NYC with my partner Nico, featuring amazing guests like Jake & Gino, Rod Khleif, Sandhya Seshadri, Yonah Weiss, Marco & Hadar and more.

• I appeared on over 40 podcasts, talking with incredible investors including Michael Blank, Joe Fairless, Whitney Sewell, Jake & Gino and more.

• I was featured in a book by Lauren and Lindsey.

• I even diversified by purchasing a café/bakery in Flushing, Queens.

Looking back, it’s amazing how all these dots connect. This journey from a busy attorney to a real estate investor has been transformative. The lessons I’ve learned will undoubtedly guide my future investments - this journey is continuing! 

I hope this inspires someone who’s in a similar position—managing a busy profession and family life—who dreams of building wealth for their family while pursuing a purpose-driven lifestyle.

I’ve already set my next big, scary, and audacious career goal—stay tuned, I’ll share more in the future!

Special thanks to Marco, Hendra, Joe, Mercy, Hadar, Chris, krista, Remo, and my other partners in deals - Greg, Darren, Ray, Christina, Debbie, Keoni, Dmitriy, Jonathan, Vlad, Jaideep, Alex, Jason, Christine and many more for letting me be a part of their journeys.

I just attended this course and all I have to say is wow. For anyone considering signing with them, do some serious research first. I wouldn’t go as far to say it’s a scam, but the amount they’re taking as a cut is unheard of in the industry. 

I signed up for the course to expand my local network. It was anything but that. It’s a sales pitch for you to invest with them at extremely lucrative rates for them. I’m at a stage where I’ve built a small portfolio and now I need partners/investors in order to continue my rate of growth. 

If there’s anyone that attended one of these MFM seminars and is considering it, let’s connect as I believe we can create a win-win and you can actually be an investor rather than a piggy bank for shops like them. 

I just attended their orientation seminar today in NYC but didn’t sign up for 3-day train. 
Their method of “forced appreciation” is kind of interesting. But when they bring up the syndication approach of LP+GP, that they will help me raising 35% down payment from private money in exchange of 65% share of ownership, I shocked. It’s a huge red flag. 
I realize they are not making their profit in educating investors. They charge $1500, get you into the door, using you to find a deal, setting up partnership to make you carry 100% debt and all the risk, while ripoff 80% ownership (include the 10% for sponsorship to get loan)

You definitely can get some useful information from their event but do deal with them? Run!! 🤦‍♀️🤦‍♀️

I owned a rental home there.  It was nothing but trouble.  The pipes got stolen, the tenant flooded the place.  The front door got stolen.  Tenants stole the appliances (which is why you don't generally provide appliances in Buffalo).  The city was often disorganized.  I could never get them to acknowledge that the property was no longer two units.  So, unless you have a boots on the ground in Buffalo, NOOOOOOOO!!!!!!   Also I went through 5 property management companies, all of them skimmed a little extra, got in fights with the tenants, etc.  Just my opinion.  

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!