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All Forum Posts by: Account Closed

Account Closed has started 2 posts and replied 115 times.

Post: Steps to acquiring our first multi-family/larger commercial site?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

Hi Diego! Congrats on your success and pursuing multifamily! Here's a curveball ... go bigger than 32 units.  We started pursuing smaller multifamily with a 6 unit in Chicago and quickly realized it would be difficult to scale.  That same $100K could be used to buy a 100+ unit complex and now you've got economies of scale with low property management costs.  We went from pursuing smaller multifamily to our first property of 173 units and now another 236 unit deal we're closing on in a few weeks.  Syndication takes a team and the right mentor, but we've found it's the best way to truly build wealth and scale a portfolio.  Shoot me a message if you have more questions - happy to help and best of luck in your journey!

Post: Multi Family mentor program (Rod Khleif)

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

Hey Wes! Congrats on pursuing large multifamily - you're on the right track! My Dad and I had a couple of mentors before we finally found the right one.  It can be confusing with so many options to choose from, but once we found the right mentor our success was fast-tracked (0 to 173 units and now another 236 units closing March 1)

Here are a few things we realized are super important to look for in a mentor to be successful:

-Will they partner with you? (this is a MUST) In any market - as long as they agree with the underwriting and have confidence in your leadership. (*in any market is crucial because some mentors will only partner in one area which creates too much competition amongst their students)

-One-on-one coaching directly from the MAIN mentor (NOT a sub-coach). Many mentorship programs are growing quickly and they can't keep up with the pace so they bring on "sub-coaches".  You absolutely want direct access to the Mentor who has all of the experience. We can text/call/email whenever we need ours and he's super responsive.

-Culture of the group - this is established by the leader.  Look for integrity, character, and a standard that's required of all members in terms of how you do business and treat one-another.  Your success depends on the reputation of your group - make sure you like their reputation. Our mentor only accepts a few people a month at the most and he screens everyone to make sure they're a great cultural fit. The importance of this and impact on your success is often overlook and/or underestimated.

-How is their existing portfolio performing? Make sure their investors are raving fans and the properties are on-target or exceeding target. 

-Is the entire group active? or just a few people? You want a group that's very active and high-quality people who are driven to make it happen.

Hope that helps! Best of luck in your journey - you're in for a wild (but very fulfilling) ride! :)  Feel free to reach out or shoot me a message if you want clarification on any of my points above - I'm a bit rushed this evening when typing this message. 

Post: Best class of real estate in a post Covid world?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Jonathan Levi SO MUCH OPPORTUNITY in Large Multifamily right now... you just need to make sure you're in landlord-friendly markets without Rent Control and extended eviction-free policies.  We're seeing so many pocket listings come through from brokers right now - a lot of operators who mismanaged their working capital are in hot water and needing to sell.  Our 173 unit property has performed extremely well throughout the Covid crisis and we're about to take on another 200+ unit property.  If you're in the right markets there is a lot of action and we're confident that Multifamily will continue to perform well for years to come.

Post: Multifamily newbie looking for advice

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Kamlesh Kukreja Everyone has given some amazing insights and I agree with so much of it (especially the "Patience Pills" from @Ola Dantis! SO TRUE) 

Happy to give some tips based on my experience in the Multifamily world - 

1) You don't have to start small and then build big... we went from 6 units to 173 units once we found the right mentor (and I know investors who went from 0 to 100+).  When we purchased our first 6 unit we quickly realized how challenging it becomes to scale because of...

  1. a) How much you're paying a PM (Property Management Company).  You're looking at 10% - 13% for the smaller properties versus 3% or less for the larger properties
  2. b) You use up a lot of funds very quickly - the same amount of money we used to buy a 6 unit could be put towards buying 100+ units (and still have very lucrative returns)

2) If you're going to hire a paid mentor, here's what's most important in my opinion (We spent $80K in mentors BEFORE we found the right one that actually helped us get our first deal across the finish line - and soon to be 2nd deal that's 200+ units)

  1. a) They need to be willing to partner with you on the deal - if they agree with the underwriting, ideally in any state of your choosing.  Some mentors will only partner with you if the deal is in their home market which creates a feeding frenzy and too much competition in one area.
  2. b) You need to have 1-on-1 coaching from the HEAD guy - NOT a sub-coach.  There are a lot of companies out there who are scaling too quickly and their only qualification to add someone to their group is if they can pay the cost of entry.  Then they bring on "sub-coaches" to try and keep up with the volume - turns into a churn and burn.  Many of these sub-coaches only have 1500-2000 units under their belt (red flag)
  3. c) You want to make sure the group is actively doing deals - how many members are in a General Partnership? Big red flag if there's only a few people in the group doing deals
  4. d) What's the culture of the group? Are their values defined and are people held accountable to them? We were a part of a group where you couldn't talk about a deal you were looking at if you weren't under contract because someone would steal it from you - it's very difficult to be successful in a group where there is no trust.  Culture starts at the top - does the leader screen people before they add them to their program? Are all members aligned in their values? 
  5. e) What's their reputation with investors? Are their deals performing even in the midst of Covid? Are investors happy because deals are on track to achieve targets? What's reputation with brokers and lenders? Have they closed on on the deals they put under contract? (This is crucial to good deal flow)
  6. f) Underwriting - how many hedges do they put in place to make sure the deal will perform? Are they truly conservative? (What cap rate are they using? Are they using a cap rate escalator for refi and sale? How are they projecting economic vacancy? <--should be 10% minimum for B/C assets / What type of income growth are they projecting once the property is stabilized? Are they scaling income in over time or all at once? Are they looking at cash-based T12s or accruals? There's a lot here on underwriting - it's SO IMPORTANT because you're attaching your brand to someone's name and you want to make sure that they are solid in how they buy properties - I have a couple of recordings from our mentor that can give you some more insight- message me and I can find the link and send it to you) 
  7. I know there is A LOT here - I wrote more than I planned on writing haha! But these are things I really wish we had known when we started.   Cheers to your new venture!

Post: Commercial real estate mentor. Is 50% until $500k a normal cost?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Juan Pablo Murillo looks like I’m late to the party here but I can offer my two cents on mentorship. I’ve invested close to $100k in various mentors until I found the right one that fit my values and goals. The mentor I’m with now charges a flat annual membership and coaches you through your large multifamily deals (100+ units). If you want to partner with him you can and there are certainly advantages to doing that – but he charges much less than 50% for partnership. I haven’t ever heard of such a high split at 50%. It seems like it does not leave much equity and profits for the remainder of the general partnership team and all the various roles you need to fill.

Post: Lots of capital, no experience- how to start?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Lauren C.  Kudos for doing your own due diligence and evaluating where to start!  Like @John Fortes mentioned, you are certainly qualified for 506b offerings - my Dad and I are syndicators and a part of a large group of syndicators who accept sophisticated investors like yourself. Another consideration and a curveball... active investing ...meaning starting with large multifamily (100+ units)! We successfully went from 6 units to 173 units (and about to add 100+ more to the portfolio) with the right mentor. Many people think you have to start small and build from there - and you can...but you certainly don't have to. We quickly realized after purchasing a 6-unit that it ties up a lot of your capital and it's difficult to scale. The ROI is typically much higher in larger multifamily! It all depends on how active you want to be...you could passively invest in a syndication and double your money in 5-6 years OR you could actively invest and your ROI could be even higher. Happy to chat if you'd like ...feel free to reach out. Best of luck in your RE journey!

Post: Investing in Apartments in DFW

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Alan Hale

Hey Alan! I live in Fort Worth as well. My Dad and I got into multifamily a couple years ago. We started with six units in Chicago, but like you mentioned it becomes difficult to scale. We researched how to go bigger and found the apartment syndication concept. We were lucky enough to hire a great coach/mentor and closed on our first large deal of 173 units. Our focus is mostly B/C class value-add that are 100+ units - and we usually avoid the Dallas-Fort Worth area just because it’s too expensive to get the returns that we need for our investors. Not sure if this helps or if you were looking for someone with experience on smaller properties but just thought I would throw it out there! Best of luck in your journey!

Post: Multifamily Courses - Brad Sumrok or Neal Bawa?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Deanna Wallace Thank you!! After we closed on the 6-unit we quickly realized it was going to be very difficult to scale from a Property Management & cash up front perspective so we started looking into larger multifamily and found the right mentor (ours specializes in 100+ units).  Doing larger MF allows us bigger returns on our capital, less headache because we hire out property management, and really awesome tax benefits! I think that every real estate strategy can be profitable...it's about finding what fits your lifestyle and your financial goals and for us it's apartments! :)

@keeleyhubbard Wow, that's a big jump from 6 to 173 units! Congrats! We're currently at 4 units looking to acquire our next property. Did you know you wanted to make such a big leap before connecting with a mentor or did your mentors help you change direction?

Post: Multifamily Courses - Brad Sumrok or Neal Bawa?

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

@Rodney Robinson YES - exactly! I have no problem paying for a mentor if I know it's going to save me years of headache and a lot of money from making amateur mistakes.  Especially in the apartment syndication world...when you're dealing with investor capital, there's little to no margin for error.  It's a small world and you can't afford to partner with the wrong person or mess up the deal.  We had 2 major things happen to us in our first syndication that probably could have sunk us if we didn't have a mentor with a lot of muscle to back us up and help us get through it!

Post: How to invest $275K in cash?! Newbies need help thinking it out

Account ClosedPosted
  • Investor
  • Fort Worth, TX
  • Posts 120
  • Votes 146

Hi @Chloe Mayer! Personal experience/opinion here... I would absolutely look into Large Multifamily Syndications (apartments). We originally started with 6 units in Chicago and quickly realized it's very difficult to scale (and uses up a lot of your cash quickly) - so we transitioned into large multifamily. A lot of people think that you have to slowly scale up (6 units --> 20 units --> 50 units...etc), but you don't! We went straight from from 6 units to 173 units under the guidance of a successful mentor. You can take down large deals like this (100+ units) because you do it with a team of people. The returns are extremely lucrative as an "active investor" - and they are great as a passive investor as well - just depends on what your ROI goals are. Sometimes it's easier to explain via phone - feel free to shoot me a message...I love talking real estate. Best of luck on your RE investing journey!