All Forum Posts by: Mack Benson

I am definitely a fan of partnerships. 

All of the high performers I can thing of have really accelerated their portfolio growth after they developed high value partnerships. 

If you are doing it solo you are only beholden to you but if you are in a partnership you are now accountable to someone else too. 

If you are going at it solo you need to be an expert at everything, this is a high improbability of success so it's easier to find a partner whose strength is your weakness which can allow you to further develop your strengths and become even better and stronger. 

Having a partner can also propel you into larger property classes, if you are only relying on your capital you can only purchase what you alone can afford. 

If you are partnered you can afford what you both combined can afford. 

By partnering you can also split the responsibilities rather that you carrying the entire responsibility.

I believe what you are talking about is delayed financing. This is when you buy a property with cash and then shortly after, do a cash-out refinance and pull all or most of your capital out of the property. It's a quicker way than having to deal with the seasoning of a normal conventional loan which is usually about 6 months. With delayed financing there is no seasoning so your offer can be cash but then you can turn around and use the refinance almost immediately so you can use the leverage you are looking to use.

@Alex Torres, welcome to BiggerPockets! I think the best advice someone can give someone starting off is to find your passion and focus on that one thing there are a lot of shiny objects in this industry and a lot of temptations to follow a different path than what you are on. Find one and stick to it, learn everything you can and become an expert. When you have achieved your version of success in that one thing then look for another and never stop learning.

Good luck!

@Gavin Mease, I hear a lot of experienced investors suggest to look to your existing network first. Make sure everybody in your life knows what you are trying to do. Always be taking about it because you never know who is interested or who knows someone who is. Connections can grow organically this way. Another option is to attend meetups and conferences, both virtual and in person.

Costar or Reonomy will probably give you the most comprehensive data available, both are in the data business. Costar has a bunch of data on their website for free but it isn't going to be as in depth to the property level as you are looking for, it would be more of a market overview. The good stuff is going to be behind their paywall, after all, they are in the data business.

I've heard you can reach out to a regional sales rep for a sample of the market, the cost for the full data is not cheap so the test drive may be a good idea for you.

For me there are a few reasons I like multifamily versus single family. For multifamily I am specifically looking at say 30+ units. 

Economies of scale. To get up to 30 SFRs you will usually need to do 30 different closings, for a 30-unit multifamily you will be able to do it with a single closing. In my market if I want 30 SFRs then I will have 20 different furnaces but the multi will likely have a single boiler for heat. For SFR I would have 30 roofs but the multi could have 1. I also save close to 50% on my property manager cost.

Ability to force appreciation. Both types have the ability to force appreciation but in multis the value of the property is directly tied to the NOI. SFRs are valued based on the market comps so if it is completely independent to your rental rates. In a multi, you can update the interiors or decrease your expenses and the lender will see it as an increase in the value.

Tax advantages. A lot of SFRs out there do not make sense for accelerated depreciation and it probably doesn't make sense to 1031 from SFRs. Both of those can help with your tax liability, especially the accelerated depreciation that was included in the 2017 JOBS Act.

Rather than look only at the rent per door I think there are numerous considerations to make. SFR is a residential property where multifamily is a business valued based on the performance of the asset and the market cap rate. What is the cash on cash return for each of the asset classes? I've run into quite a few apartment operators whose only regret is that they stayed in the residential space longer than they should have.

Good luck!

Do you have a physical due diligence contingency in your contract? Only being able to get in 50% of the units is a no go in my book. How can you be certain that the units are not completely gutted? I know residential is different than commercial so I may be biased but not being granted access to 50% of the property would definitely send up the alarm bells, I would want to inspect them even more. What does your lender say? Are they okay not having a full inspection done in order to protect their investment?

In my area a $150,000 duplex would be close to a complete gut or tear down. Without more information we can't know for sure. Where is the property located, what are the rents, what are the expenses? Are you working with a local investor friendly agent who can help guide you through this or do you have a local mentor who knows the market?

At that size you won't be dealing with a buyers broker, you'll be working directly with the selling broker so you should try and get in front of them. A couple tactics that have worked well for me is to call property managers and ask who they recommend. Most likely you will keep getting the same brokerage because in most areas, 6-8 brokers do about 80% of the deals. 

Another way is to go to Loopnet.com and go to the Menu > Find a Broker. Check the box for Investment Sales and choose Multifamily from the Property Type Expertise dropdown. You'll get way too many results but it's a good way to build a list. Go ahead and start emailing them to make contact.

Good luck!

Welcome to BiggerPockets. I think there are three things anybody new should focus on

• Goals - You said you have a goal of setting you life up for a comfortable retirement. What does that mean to you? What do you see yourself doing during retirement and up until that point? Is there a timeline for this goal? What can you do today to move yourself toward that goal? Focus on the micro while being mindful of the macro and don't get lost in shiny object syndrome. If you want to own apartments, what can you do today to get yourself closer to that goal?
• Education - Podcasts, videos and books. Almost every single high performer you will hear from are voracious readers. I'm also a fan of mentor or coach but that can be a touchy subject and it isn't necessary in all situations. I firmly believe my goals and my situation was assisted with the mentorship program I joined.
• Network - This will be the most valuable thing you do in your entire life. Even if you decide that real estate is not your bag, the connections you make may help you with whatever you do in life.

Good luck!