Omar,
First off, thank you for getting in touch and I greatly appreciate all the questions you have given to me (they may have made my head spin a little but in a good way!). These are really great questions! Would love to know more about you as well regarding these questions (seriously, I had fun answering them!).
You have a clear goal of 100 units. What property class â A, B, C, D â and niche â value-add, new builds â do you want to target? Why? I target C properties in B areas that are apartment complexes that were mis-managed or become available. I love value add, I actually spotted a property recently that had 33 unites with a potential to raise the value to almost half a million dollars by raising the rents, however it was section 8 (all disabled or hands-capped) but in what looked like a revitalization area and I don't have experience with section 8. So essentially this property not only would cashflow but it would also have a huge value add proposition attached to it. I would buy with a little more knowledge regarding section 8. The only things holding me back on it are due diligence and finding a private investor for the down payment.
What are your investment parameters from a risk and return perspective?Iâd like to invest with as little money down as possible however I keep a major reserve ready in case of an emergency where I would need to put it down. I have been building credit for 2 companies I own that will come in handy soon. Generally I am being very good at creating multiple methods to finance a deal because I analyze for all situations even where ones would pop up and cost a lot because as long as you can buy at the right price in the right area, there should be little risk if you've got a solid process (nothing is 100% but you can come close to it).
How much capital are you willing to invest? How patient are you? I am willing to invest the current amount I have saved because my other income streams will keep me afloat in case of an emergency (if you want actual numbers, PM me :-) !)
Multifamily has been on a hot run in the past few years. Attractive past returns might not be reflective of future returns. Donât believe anyone who is 100% convinced; best to have a healthy dose of skepticism. That being the case, what is your investment time horizon? In the next 5 years, I would like to build enough cashflow from real estate so that I can have the option to work. I have many great years of investing (aka the rest of my life :-) ), but I would like to plant the seeds now in areas I determine will allow significant growth.
Do you plan on being an active or passive investor? You can start passive and move into active. But I would find an experienced operator to partner on syndicated deals to get your feet wet. Eventually, you can invest on your own or as part of a syndicate when you establish credibility and experience.I plan on being active at first and then move to passive. I have so much energy now that I'd like to use it towards being an active investor, however if I am able to work with an experienced investor and need to be passive in order to learn, I'm game. I'd like to establish credibility and experience for sure, especially when it comes to knowing brokers who find you the deals. I respect the fact they only want to deal with serious buys and I will never approach a broker or agent for a deal where I don't have the finances to put down, however if a broker has taken the time to find a deal based on my wants I would have no problem with analyzing and raising money for it if it is lucrative!
If you plan on being an active investor, apart from capital, what else do you bring to the table? For e.g. you have mentioned that you have a multimedia company. Are you good at marketing or designing marketing campaigns? Just an idea for you to consider how to leverage your massive talent set. I bring the knowledge of analyzing deals and knowing which ones are a blip on the radar and how the numbers need to match up in several casesâ¦but when they donât sometimes it could be an opportunity! I am a designer (graphic, web, and am experienced with video editing (I have edited and designed for many fortune 500 companies and have a portfolio for my work). I know several methods of creative financing, I have built 2 houses (tiny but stillâ¦houses!), I own a company that manages all my properties (so management experience) thatâs fully online and is super easy to run based on the infrastructure I've setup.
