All Forum Posts by: E. C. "Stony" Stonebraker

@Matthew Barnett, it depends on what size multifamily and location you are considering.  It should be more effective with smaller MF (<50 units), again, depending on location.  A greater percentage of those properties are "Mom & Pop" owned properties who may be more inclined to work without a broker.

In a study of larger (>50 units) multifamily properties in Florida, Beau Beery reports in his excellent book "Multifamily Investors Who Dominate" (which, IMO, is the best book for MF investors), ~93% of all multifamily sales over a 5 year period were closed through brokers.  Now, that still leaves 7% for others.  If you are a contrarian, go for that 7%.  However, you are competing for properties with companies that have their own call centers, years of experience and mature call scripts and statistical algorithms who are calling owners every day all day long.

Having said all of that, if you are going to use foreign VAs, I would suggest using Philippine VAs as their English is excellent and with little to no accent.  That's all I can offer you, except good luck in your search!  Keep us posted.

@Jon Schwartz, capex is usually budgeted for a specific business plan to upgrade the property exterior plus a % of the interiors based on quotes or your estimates.  Future repairs and maintenance (R&M) are funded by the reserves of $250+/- per unit/year, depending on the location and condition of the property. Then if you know of specific future capex expenditures, you can use inflation to forecast roof replacements, etc. in 5 years or whatever period makes sense for the property.  It's an art rather than a science.

@Salvatore Lentini, I agree with @Richard Neuharth.  Call brokers in the markets you want to invest in.  Over 90% of multifamily transactions are handled by brokers.  The exception might be if you are investing in small multfamily (<100 units).  But Total Commercial, Brevitas, Commercial Cafe and many others have listings that might fit your criteria.

@Account Closed, keep learning and networking are two actions you can take when starting out.  The basic concept of investing in income property is easy to understand, but there are lots of details that only get revealed when you get into a deal.  Go to meetups and volunteer to help sponsors and other investors in their deals or just ask if you can sit in on negotiations.  You want to find one or more skills you can add to others who do the deals so you can keep learning and growing.  If you already have a growing team, perhaps you can find a broker or other investor to help you get your first modest sized deal which will help you learn those details I mentioned earlier.

Good luck!

@Brennan Vaughn. Try Jose A. Ramirez of Advanced Tax Advisors or Ted Lanzaro of Lanzaro CPA, LLC. If you need their contact info, let me know. Both are very good.

@Brian Warren, it looks like you are off to a good start on your investing career.  As others have stated, in order to acquire a larger multifamily, you'll certainly need at least one experienced partner who has a longer track record and you'll need (maybe the same person/company?) a strong financial partner.  Lenders won't likely want to be involved unless your track record is stronger than you've described here.

The larger multifamily properties are treated differently by lenders and the lenders are typically different.  Usually larger multifamily is funded by agency loans rather than local banks, so check around.  A lender broker can help you understand the financing, which is a critical piece of any deal, and the broker may have investors he or she knows who might like to help you on your deal.

Go to local real estate meetups and see if you can find potential partners & lenders you know, like and trust, to help you understand the steps in acquiring, operating and disposing of larger multifamily properties.

Good luck!

@Neil Anthony, if you want to learn the MF space, I think investing as an LP in 2-3 syndication deals is an excellent start, especially if you are investing out of state and, assuming you have a full-time job.That is how I started.

You can learn how sponsors evaluate and offer deals, listen to other investors ask questions of the sponsors, and, IMO, you can attend in-person events where you can meet other investors and sponsors and ask all the questions you want as well as hear investment stories of all kinds.

Once you get through some time immersing yourself in the MF investment world, you will have a better idea of whether you want to be an active or passive investor.  

Of course, there are plenty of books to read and speed up the learning process. You've probably read many yourself.  Some I like include The Hands-Off Investor by Brian Burke, The ABCs of Real Estate Investing by Ken McElroy, The Millionaire Real Estate Investor by Gary Keller, Tax-Free Wealth by Tom Wheelwright, What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli, Emerging Real Estate Markets by Dave Lindahl, Financial Freedom with Real Estate Investing by Michael Blank, The Perfect Investment by Paul Moore, and many others.

If you want to talk more about your path, feel free to contact me.

@Ahmed Al-Absi, you might consider Murfreesboro and Chattanooga.  I haven't been to either place in a couple of years, but should have good potential.

@Rebekah Hitt, I've seen ROIs for LPs promoted from 6% or 8% for conservative institutional investments to 15% and higher IRRs, especially a few years ago.  Today, returns are compressing because of competition so you won't see as many of the higher returns offered. 

We check backgrounds, referrals, regulatory databases, online searches, etc.  Mostly, we want to get to know the sponsor and their team to be sure we are compatible with our investment strategies and personalities and that we can trust them. 

@Jamie Grubb, @Jim Pfeifer, we all go through a learning process, and the quickest way, by far, to learn is by doing, hopefully with people you trust and who may coach you along the way.  Whether that is by investing as an LP, investing in smaller properties, or investing in a coaching program, they can all work.  

The main advantage of investing in syndications as asked by @Justin Goodin, is the passive nature of them.  It is an excellent method to invest and has largely been unknown to the general public until recent years.  Mostly syndications have been known and available primarily to knowledgeable, full-time investors and friends of the wealthy.  Thanks to the internet and online platforms such as BP, the word is spreading!