The Top 10 Myths of Multifamily Real Estate Investing

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This Money Monday$ learn the top 10 myths of multifamily real estate investing! Join the conversation and bring your questions.

VIDEO TRANSCRIPTION

00:00
do this eventual we are in houston it is
00:02
central standard time
00:04
you know and we’re at 3 31 so we’re like
00:06
a minute late yeah but ben is always
00:08
screwing around
00:09
and uh wasting a lot of time but we are
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here on
00:13
monday morning so weather is nice it’s
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monday afternoon technically bro
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afternoon ben is happy to finally have
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something right
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but what are we talking about today man
00:26
we’re talking about the 10 myths in
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multi-family real estate
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no i know myth number one everyone that
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does real estate
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has a lot of hair oh
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we knew you had to get you had to get
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the ball joke in
00:39
it wouldn’t be a money monday without it
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yeah i think at this point like if you
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don’t have it people are gonna be like
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what’s going on these guys are off today
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i know ferris is off this game
00:47
so no there’s there’s a lot of miss and
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once again folks we want this to be
00:51
interactive
00:51
a lot of people are tuned in you guys
00:53
are doing deals you guys have heard some
00:55
of the stuff out on the streets right
00:56
you know dump those in the comments
00:58
give us a like give us a share you know
01:00
we want to these are just
01:01
some of the stuff that we came up with
01:02
right but there’s plenty more out there
01:04
um you know let’s just go ahead and kick
01:06
this off man what do you say talk about
01:07
it let’s do it let’s do it
01:08
all right you have to promise not to
01:10
talk too long at any one of these ben
01:11
i’m going very very quickly all the way
01:13
through them i’ve got my coffee so i’m
01:14
moving fast
01:15
all right you can quickly achieve
01:18
financial freedom
01:19
through multi-family investing i think
01:20
uh that’s probably like
01:22
the biggest myth yeah it’s not a
01:24
get-rich-quick scheme not all
01:26
right whether you’re passive or active
01:28
both sides of it that
01:29
you know yes it can generate wealth but
01:32
it takes time it’s a get-rich-slow game
01:33
but you do build wealth
01:34
yeah it’s it’s and it’s also one of
01:35
those it’s almost like a snowball right
01:37
you know
01:38
the snowball’s gonna start off small at
01:39
first and it starts getting bigger
01:41
and it starts getting bigger right you
01:42
know it’s all about momentum
01:44
um you know but the myth that you can
01:46
retire in five years off of this
01:48
uh i’d probably say is a big myth
01:51
right you know because you’d really need
01:53
enough capital
01:55
to get that much momentum and build up
01:56
your snowball uh
01:58
to be able to step away but at that
01:59
point if you have that much money why
02:01
are you even
02:01
busting your butt doing this in the
02:02
first place that’s kind of my question
02:04
right
02:04
so i think the biggest myth that i see
02:06
is people thinking that they can roll
02:08
into one or two maybe three deals and
02:09
then they’re set for life it doesn’t
02:11
work like this folks
02:12
you know um you’re going to provide a
02:14
good amount of money for your family and
02:15
that’s great
02:16
but you need mass to be able to really
02:19
step away
02:19
especially depending on how old you are
02:21
what your circumstances are right
02:22
yeah i’d say myth number two and these
02:25
are not in any particular order other
02:26
than the first one i’d say was probably
02:28
the most important this might actually
02:29
be number two
02:30
right that you need a lot of experience
02:32
to get kicked off right
02:34
and i always tell the story um you know
02:36
and as i’ve gotten i guess a little bit
02:38
more confident in my career i can say
02:40
this story now but
02:41
when i first started off i didn’t really
02:42
have a whole lot of experience at all
02:44
right you know and why is you know why
02:46
did why did i feel comfortable rolling
02:48
into a deal
02:49
because it kind of ties to number three
02:50
which the myth is you need to do
02:52
everything yourself
02:52
boom right now partners team it’s a team
02:56
sport right whether you have bad
02:58
partners or good
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oh sorry did i point you away then how’s
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that whoa whoa whoa
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you know but no it’s a team sport right
03:04
partners whether they’re in
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uh you know exclusive or you know deal
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partners right
03:09
it’s about getting figuring out who has
03:11
different strengths
03:12
who has different weaknesses and getting
03:13
a deal done right so
03:15
you know you don’t want to do it you
03:16
shouldn’t do everything yourself
03:17
honestly yes some people
03:18
do work but if you don’t have the
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experience this is where you
03:22
lean on other people it helps yeah so i
03:24
mean bottom line
03:25
right you know everybody starts at zero
03:27
is kind of saying that i always say
03:29
right because at the end of the day
03:32
right you know
03:32
you’re not gonna just have a wealth of
03:34
experience and then go out and do this
03:36
again right you know i mean some people
03:37
maybe they semi-retire they come back to
03:39
it but
03:40
everybody’s gonna be most of the time
03:41
coming from some corporate w-2 gig
03:44
they learned about this from a friend or
03:46
a guru or something online
03:48
and then they decided hey that’s
03:49
something that i want to do so you go
03:50
out and start it right so you’re not
03:52
going to know what you don’t know
03:53
that’s why you need partners that’s why
03:54
you don’t do it all on your own right
03:57
you know another myth number four
04:01
you need to be wealthy to get involved
04:02
in multi-family investing and i’m going
04:04
to kind of tie it to the other two right
04:06
yeah which is you don’t have to do at
04:08
all yourself you don’t you don’t have to
04:09
be aspects of it right
04:10
you know somebody on your team needs to
04:12
have liquidity
04:14
needs to have net worth but that doesn’t
04:16
necessarily mean that that has to be you
04:18
now the caveat being you probably want
04:21
to have some money
04:23
in some net worth and some liquidity but
04:26
but you don’t need a lot
04:27
it’s kind of like even on the
04:28
residential side right everybody you
04:30
know talks about starting off as a
04:31
wholesaler
04:32
right why why are there more wholesales
04:33
and everything else because you don’t
04:34
need any money to be a wholesale yeah
04:35
it’s it’s it’s
04:35
about finding a person with a problem
04:37
getting contract finding the person has
04:38
another problem which is they need
04:39
assets and you sell to them
04:40
you’re flipping it right in commercial
04:42
real estate
04:43
same kind of things can be applied where
04:45
you know you’re finding people that have
04:47
different problems this guy has
04:48
liquidity he doesn’t have a deal
04:50
this guy needs a deal you know if you
04:51
can bridge that gap you can go ahead and
04:54
you know family yeah you’re can be a
04:55
matchmaker without bringing much money
04:57
to the table
04:58
right now someone like ben said needs to
05:00
have it someone needs to cover the hard
05:02
costs right there are hard and soft
05:03
costs
05:04
but ultimately does not have to be
05:06
because i i always tell people right you
05:08
know you got to earn this money which is
05:09
probably the big
05:10
chunk of money that you’re going to need
05:12
to get into a deal right but you’ve got
05:14
other
05:15
you got other you know small or hard
05:17
costs right like your application fee to
05:19
your lender right that’s
05:20
going to be anywhere from 10 to we’ve
05:21
seen it upwards of 50 grand right you
05:24
know you might have to pay for your due
05:25
diligence right if your property
05:26
management or your general contractor
05:27
doesn’t do it for free most of them
05:28
don’t
05:29
unless you’re just a long-term client
05:31
right you know and even then they might
05:32
pay for you might have to pay for
05:34
something that’s probably going to cost
05:35
you
05:35
25 to 50 per door right you’re gonna
05:38
have to pay for that
05:39
right you know sometimes your your
05:40
lawyer you know they might get
05:42
the bulk of what they get paid for you
05:44
know um at closing but they might want a
05:45
retainer
05:46
right call that five to ten grand right
05:49
so all this stuff kind of adds up so
05:50
somebody’s gonna have to have some money
05:52
right but once again like ferris pointed
05:54
out right it might not necessarily be
05:55
you
05:55
maybe you found the deal you found the
05:57
guy or gal that has the cash
05:59
and boom sounds like a match made in
06:00
heaven right you know that’s that’s the
06:02
starting of a partnership right there
06:04
right
06:05
number five you should start smaller i
06:09
hear this one all the time
06:10
you have a great story i’d like you to
06:11
tell right uh when starting off as a
06:13
real estate investor right
06:14
you know yeah you know kind of go
06:16
through i mean i was gonna do my own
06:18
32 unit deal in northern houston
06:22
yeah and i’m glad i did not win that
06:23
deal right ultimately i learned about
06:25
syndication okay i’m
06:26
realized kind of the value of it and
06:29
just
06:29
hop in and figure it out right allowed
06:30
me to do a bigger deal and really kind
06:33
of continue to do something that’s
06:33
scalable because even if i did that 32
06:35
unit would have done it myself and like
06:37
you know we wouldn’t be doing this
06:38
probably oh yeah we’re gonna be here and
06:39
how long how long would it
06:40
take to have gotten enough money to go
06:41
to the next 32 unit right like who knows
06:43
who knows right
06:44
versus this can be scaled right again
06:46
finding people with different problems
06:48
and you’re filling the gap so and i
06:50
think a lot of people they start
06:52
they think that they need to start
06:53
smaller because of
06:55
or talking about the residential story
06:57
is that what you’re talking about well
06:58
no no no i was talking about
06:59
i was talking about your 32 units that’s
07:01
a great that’s actually that’s a great
07:02
example of what
07:03
people tended to which is how much can i
07:06
afford
07:07
right and maybe or me and maybe a friend
07:09
or two or a family member or two like as
07:11
a jv
07:12
and then they just back into what is
07:13
that as far as unit counts go right and
07:15
for some people that might be a 10 unit
07:17
for some people that might be a 50 unit
07:19
right but that’s how they look at it
07:21
when they get into real estate
07:22
a lot of people just don’t understand
07:23
the syndication side and you know it’s
07:25
it’s
07:26
they get scared of the the amount of
07:28
zeros that are on the transaction right
07:29
you know a 10 million dollar deal a
07:32
three million dollar raise right for
07:34
some people they’re like oh whoa i’m not
07:35
ready to do that i don’t have any way to
07:36
do that and in some cases maybe they
07:38
don’t
07:39
but then they go it goes back to finding
07:41
somebody that can help you get into that
07:43
deal
07:44
right and that’s all about partnerships
07:45
and not not doing everything on your own
07:47
right so don’t think small
07:48
right because small as you’re going to
07:50
get ground up you know you’re
07:52
unless you have your own property
07:53
management company you have some
07:54
mechanism to be able to maintain those
07:56
your undoubtedly going to get dragged
07:59
into the muck
08:00
right you know so you need to understand
08:02
that those to that 32 unit or that 10
08:04
unit or that 15 unit
08:06
you’re going to spend a lot of time and
08:08
that’s going to take you away from
08:09
finding your next deal that’s going to
08:10
take away money from investing in your
08:12
next deal
08:13
so that’s a big myth that we see right
08:15
yeah absolutely
08:16
so i’ll pause there any questions
08:18
comments post comments questions go
08:20
ahead and chime in monday mondays do
08:21
this every monday 3 30 central boom
08:23
let’s see ronnie says what’s up guys
08:25
john
08:25
says happy monday guys happy what’s up
08:27
and happy monday to both of you
08:28
hey hey guys all right says smith you
08:30
need to be in a guru program to do deals
08:32
and raising
08:32
money that’s actually that’s a that’s a
08:34
good point i’m see this is why i wanted
08:36
to be here
08:36
that’s a good myth actually you know and
08:38
just to kind of just
08:39
you know to add to that right you know i
08:41
think a lot of people it’s there is
08:43
they put this thing up on a pedestal
08:45
because of the transaction sizes
08:47
and then they think that they need
08:48
training or mentoring to be able to go
08:51
out and do it
08:52
and and don’t get me wrong i went down
08:53
that route so i’m not here to say that
08:56
one way is better than the other
08:57
but the myth that we’re trying to bust
08:59
here is that everybody has to go that
09:01
route
09:01
right and i think that that’s a that’s
09:03
not true
09:04
and so people are getting deals done
09:07
that have never gone through any formal
09:08
training or mentoring
09:10
and that’s totally fine right they’re
09:11
going to probably learn from a partner
09:13
or from somebody else that’s in the deal
09:15
right absolutely you know in some cases
09:17
they’re just going to learn along the
09:18
way
09:19
and you learn as you go right and you
09:21
know learn from others
09:24
ultimately groups is a newer phenomenon
09:26
i’d say it is i mean
09:27
how to buy real estate previous to that
09:29
you know i think the one thing that that
09:31
it
09:31
that it gave me was an ecosystem that i
09:34
could kind of tap into
09:35
right i would say that the formal
09:36
training that i got was not was a little
09:38
light
09:39
and i think ultimately what i always
09:40
tell people is that you’re going to
09:41
learn
09:42
way more on that first deal
09:45
just doing it and being there rolling up
09:47
your sleeves and understanding how the
09:48
process works and when you need to do
09:50
uh that certain thing and at what time
09:53
you know
09:53
than you ever would in any kind of
09:55
amount of training or mentoring right
09:57
but if you guys ever need you know a
09:59
recommendation
10:00
you know you know we’ve got a couple hit
10:03
us up offline you know
10:04
um there’s a couple guys that actually
10:05
do the business the right way
10:07
so going on to number six
10:10
moving along moving along stocks are
10:12
safer
10:14
than multi-family real estate much safer
10:16
so safe
10:17
no and i’m gonna i’m gonna put up a
10:19
little bit of an example right you know
10:20
i’m not gonna name names but it was it
10:21
was a
10:22
you know somebody that i know uh his dad
10:24
worked for enron
10:26
had the majority of his you know stock
10:29
allocation in enron stock as was
10:32
encouraged by um the management team
10:35
there
10:36
and he lost over seven figures when
10:38
enron went bust
10:40
right you know also tell all the people
10:41
in eight nine and ten who took a bath
10:44
on their portfolios you know if stocks
10:47
are ultimately i mean
10:48
and that aside right like yes markets go
10:50
up and down just like real estate
10:52
but to me you know what real estate is
10:54
real there is that component of it right
10:56
and the other piece i think that’s
10:58
really different than
11:00
stocks is ultimately you know you have a
11:03
you have a ceo that does something
11:04
fraudulent shady whatever you want to
11:06
call it that has a big impact
11:07
as a human and as a shareholder almost
11:10
no shareholders have any sort of conduit
11:12
to the company
11:13
right like you have no ability to chime
11:15
in on anything really right unless you
11:17
are
11:17
extremely large shell holder which we’re
11:19
not talking about that right yeah but
11:20
ultimately you know
11:22
i mean we run the properties people are
11:24
able to call us and ask questions and
11:26
get feedback and give guidance right
11:27
so that’s the other thing to kind of
11:29
keep in mind no i i love that right and
11:31
i think
11:32
you know i was talking to a wealthy guy
11:33
this is earlier in my career and um
11:36
you know he ultimately said how much is
11:38
the land worth
11:39
you know how much i mean like you know
11:40
if we’re looking at this on a per square
11:42
foot basis
11:44
you know the thing burns to the ground
11:47
right what is the land worth and it’s
11:49
worth something
11:50
right that’s that’s ultimately what i
11:52
love about real estate yes you can you
11:53
can touch it and you can feel it
11:55
and most of the time that’s never going
11:56
to happen that the whole entire property
11:58
is going to burn to the ground in fact
11:59
i’ve never heard of that actually
12:00
happening that’s why there’s multiple
12:01
buildings
12:02
but let’s just say that it does that
12:04
land that that property is on is worth
12:06
something so it’ll never go to zero and
12:09
i think you know
12:10
with stocks the potential of it going to
12:12
zero
12:13
in ron is possible right and so
12:17
you know that’s that’s ultimately why i
12:18
feel like that’s a myth and there’s
12:20
probably gonna be some people that are
12:21
gonna
12:21
you know that are more stock driven and
12:23
they’re probably gonna say something
12:24
there and that’s fine right you know to
12:25
each their own we have obviously we have
12:28
uh stock allocation our portfolio too
12:30
right yeah everybody should
12:31
right um we just tend to you know like
12:34
real estate a little bit better
12:35
it’s a lot more fun it’s a lot more fun
12:37
right you know all right number seven
12:39
you can achieve econo economics of scale
12:42
for every multi-family property i must
12:45
say it’s a
12:46
that is a big myth right where i think
12:47
people think that oh i’ve got you know
12:50
one 100 unit property in one
12:52
submarket so therefore i’m going to get
12:54
the best plumbing costs and the best
12:56
appliance you know prices and the best
12:58
landscaping
13:00
contracts right i think ultimately
13:02
that’s not possible right you need to
13:04
have enough
13:04
mass in a specific submarket you know
13:07
you need
13:08
20 100 unit properties and then you can
13:11
go
13:11
back and start negotiating some of these
13:13
things right so i think
13:14
people tend to think that that and it’s
13:16
like that and unfortunately it’s not
13:18
right you know you are going to have
13:20
economies of scale um you know but
13:23
it’s not going to be to the extent where
13:25
you’re just going to be able to drive
13:26
your costs down 20
13:28
right it doesn’t work like that number
13:30
eight
13:31
multi-family is harder to finance the
13:34
single family
13:35
now you’ve done a lot of single family
13:36
stuff right why don’t you talk about the
13:38
process a little bit
13:39
single family is such a pain i mean it
13:41
really is right it’s because there’s a
13:42
lot of regulations a lot of rules
13:44
and you know i guess they have a lot
13:46
more people that just kind of fraudulent
13:48
or you know the government actually i
13:49
guess
13:50
and maybe it’s more so the government
13:51
got really involved in the single family
13:52
space right because you’re trying to
13:53
stop what happened previously right in
13:55
2009
13:56
so the dodd-frank deck i like to say
13:58
that i
13:59
buy apartment complexes and it’s a lot
14:01
less work on the debt oh my but i
14:02
literally fill out so much less
14:04
paperwork nobody’s grilling me for it or
14:06
asking for
14:06
quadruple verification of everything you
14:08
mentioned right
14:10
so really you know apartments now there
14:12
are requirements right it is a game you
14:13
have to play within the constraints of
14:14
that rule
14:15
right around liquidity your net worth
14:17
there’s some things that you have but if
14:18
you check those boxes
14:19
you check those boxes and you’re done
14:21
it’s not like single family where you
14:22
check the boxes and like well maybe it’s
14:24
checked and
14:25
hey can you verify and can your friend’s
14:27
friend verify and if i ask three people
14:28
in three different you know i mean it’s
14:30
none of that nonsense right it’s very
14:31
straightforward in multi-family it’s
14:33
credit score and debt to income ratio
14:35
and comps right you know
14:36
they care about credit score and
14:38
commercial actually due no no i’m
14:39
talking about single family
14:40
yeah the residential side right whereas
14:42
on commercial right it’s about the team
14:44
it’s about the sub market it’s about the
14:46
plan yes right what is this because
14:48
really crappy credit do they care
14:50
i don’t think they do i don’t think that
14:51
that you know i mean i don’t i certainly
14:53
don’t have an 800. i know that they they
14:54
they pull the credit score i know that
14:56
they do and they’ll do a background
14:58
check so you guys need to realize that
14:59
they’re doing a credit and background
15:00
check every time right
15:01
but once again what we were talking
15:03
about this with with a gal last week
15:05
right it’s cumulative
15:07
right once again you have somebody
15:08
that’s on your team that has a really
15:10
great credit score
15:11
and maybe yours isn’t all that great
15:12
well guess what it’s going to balance
15:14
out because they’re going to take the
15:14
average of the two
15:16
right and so but it’s a it’s a
15:18
commercial loan
15:19
and it’s a business so therefore they’re
15:21
looking more about who’s the person
15:23
that’s going to run the business
15:24
right who’s the what’s the business plan
15:27
right what’s the exit strategy
15:29
right and then ultimately they’re gonna
15:30
look at the sub market too right but
15:31
it’s in
15:32
these days they’re looking at the
15:33
sponsorship group right and are these
15:35
guys and gals capable of doing what they
15:37
say that they’re gonna do
15:38
right whereas residential they don’t
15:40
really care right it’s like do you have
15:42
the money in the bank or do you have you
15:43
know uh
15:44
coming in through your w-2 is your
15:46
credit score there
15:47
you know is it all backed up by an
15:49
appraisal absolutely you know and then
15:50
on top of that a thousand pieces of
15:51
paperwork right
15:52
so bottom line that’s a big myth it is a
15:55
lot easier
15:56
to buy multi-family into finance it than
15:58
it is to buy a single-family home
16:00
number nine multi-family properties will
16:03
be too expensive
16:05
to maintain and operate well in some
16:07
cases they can be a little bit expensive
16:09
and right but i think you can you can
16:11
say who cares like who cares
16:12
fundamentally who cares it’s part of the
16:14
business plan
16:15
it’s all about it’s all part of the
16:16
numbers you’re expecting to spend that
16:17
money right
16:18
yeah if i have a machine that i have to
16:20
put a dollar in and it spins you know
16:21
100
16:22
000 of gold out i mean okay i’ll put the
16:24
dollar in right like does it matter
16:26
it’s part of the cost right it’s part of
16:27
the plan you know it now
16:29
you do have more potential for error
16:33
right yeah more things you know there’s
16:35
more systems you have to make sure you
16:36
have a good property management company
16:38
right and but again like who cares is
16:41
maybe my feedback on that right
16:42
and i hear that a lot because i know a
16:43
lot of people you know in my family or
16:45
my
16:46
family’s friends they do land they do
16:48
retail right they like their triple net
16:49
lease right because it’s a lot less
16:51
headache i mean so what like
16:52
and if i can cash flow more on an
16:54
apartment than i can only triple at
16:55
least
16:56
i’m probably the one happy yes i have
16:58
more costs yes i have more expenses
16:59
right
17:00
revenue and expenses you know they’re a
17:01
different kind of ratio but ultimately
17:03
in
17:04
my philosophy is it’s part of the
17:05
business plan right as long as it’s what
17:07
i expected going in
17:08
and i always talk about it’s the more
17:11
hurdles the more
17:12
hard it is the more friction there is to
17:14
get in and do things
17:16
the less likely you’re gonna have
17:17
competition right you know right now
17:19
there’s a lot of guys and gals chasing
17:20
deals right
17:21
probably more so than there was five
17:22
years ago when we started off but
17:24
you know bottom line this is still you
17:27
you still have to have money to operate
17:28
these properties
17:29
you still need to have knowledge and you
17:31
still it’s still still a level of risk
17:33
right so
17:34
and anything that you do there’s going
17:36
to be an expense to it right
17:37
you know so don’t think that oh i got to
17:39
spend 100 oh are taxes
17:41
taxes are they’re really expensive right
17:43
you build all those into your
17:45
projections and your models and your
17:47
analysis
17:48
and then you make sure then you’re
17:49
trying to still determine does this deal
17:51
make sense from from a return standpoint
17:53
right
17:54
you know so who cares if it takes a
17:55
million dollars a door every freaking
17:57
month
17:58
to operate the property if i’m making 10
18:00
million right like i mean you got to
18:01
look at it like that right
18:03
um same thing with the price purchase
18:04
price people get caught up in this
18:06
you know oh it’s it’s expensive right
18:10
but
18:10
it’s all based on the rents that you can
18:12
achieve right if you
18:13
if you’re making ten thousand dollars a
18:14
door per year per month
18:16
right you know i mean maybe it’s worth
18:18
five hundred thousand the door
18:20
right who knows right i’m just throwing
18:22
out crazy numbers but you guys get my
18:23
point
18:24
so number ten you can easily control the
18:28
value
18:29
of your multi-family property right yeah
18:32
and i’d say i mean it’s kind of uh
18:35
they’re
18:35
you know we were talking about the myth
18:37
not easily we’re talking about yeah
18:39
what’s nice about commercial versus
18:41
single single family you can’t control
18:42
it at all
18:43
no why because it’s it’s based on the
18:45
comps right you need the whole
18:46
neighborhood to increase
18:47
it’s really hard but multi-family you
18:49
can control it to an extent meaning
18:50
i can do things that drive value that
18:52
improve my noi which improves value
18:54
right now the problem is it’s the easily
18:56
that bothers me you can control it but
18:58
not easily it’s a lot of work to usually
18:59
boost in a while yeah right and
19:01
short of the previous owner just
19:02
completely missing obvious ways to boost
19:04
it
19:05
you know doing a turnaround or a value
19:07
add takes time it takes a year of work
19:09
right two years of work depending what
19:11
you’re doing and so
19:12
can you do it yes is it easy no no i
19:15
agree
19:16
i agree right you know i mean it’s not
19:17
gonna be something that
19:19
you you’re just gonna turn on a switch
19:20
and you’re better than the last guy
19:21
right you know i mean there’s definitely
19:23
a lot of work to
19:24
that goes into it right especially on a
19:25
lease up right you know i mean i’d say
19:27
i’d say where we’ve seen the biggest
19:29
driver of value right is we take these
19:30
hairy deals
19:32
that were completely unstabilized and
19:34
underperforming
19:36
what’s up uh well you know we take on
19:38
hairy deals to help then get more hair
19:40
oh
19:41
i never connected that dot to us now but
19:43
i thought that was pretty well that’s
19:44
pretty good man that’s pretty good
19:46
one more no but i mean you can think
19:47
about it folks right like you’ve got
19:48
something that is
19:50
achieving 30 dollars less and you know
19:52
say it’s 30
19:53
units a thousand units or a thousand
19:55
dollars a unit right so 30 000
19:56
in income right if i if i can just each
19:59
month bring
19:59
units online i’m increasing the value by
20:02
i mean you apply a cap rate to that and
20:04
you guys can kind of do the math right
20:06
you know put a five cap on that
20:08
right whatever that comes out to i mean
20:09
probably a lot i don’t have i’m not a
20:11
math list
20:12
you know i use excel in calculators so
20:14
bottom line like he said
20:17
you can but you can’t do it easily so
20:19
that’s another big myth
20:20
right so did we miss anything does there
20:23
anybody else have something
20:24
so monday mondays every monday 3 30
20:26
central if you have comments questions
20:27
let us know we usually present something
20:29
if you have ideas for future topics let
20:30
us know and we will present on it
20:32
this one actually came from one of our
20:34
audience guests um
20:35
and so ultimately uh we spent the you
20:39
know the first 20 minutes presenting and
20:40
then 10 minutes q a
20:42
we’re about in the q a so if you have
20:43
comments questions let us know we will
20:44
answer them live
20:47
says great place to start but not a
20:49
place you can scale i think the single
20:50
family
20:51
thanks so much yeah yeah nelson james
20:53
says uh what’s the minimum size
20:55
property sorry yeah what’s the main
20:57
enterprise property does one need to
20:59
achieve economies of scale in
21:01
multi-family
21:02
you know i mean i wouldn’t say property
21:04
i’d say
21:05
you know properties you know and i’d say
21:08
really to get
21:09
to get a good bulk contract on something
21:11
you’re talking a thousand two thousand
21:12
but if you’re talking about
21:13
on a specific property how many units
21:15
should you have to have economies of
21:17
scale well then the within the property
21:19
80 nope right where you can support
21:21
full-time payroll right we
21:22
we won’t buy anything less than 80. it
21:24
just becomes too much of a hassle yeah
21:26
so there’s a
21:27
there’s a there’s a management component
21:28
that makes it very very challenging
21:30
right because
21:31
you have to have the revenue coming in
21:32
to have the the full-time staff
21:34
which we need to have because that’s
21:36
just our business model um
21:38
you know but i mean i would say in a sub
21:40
market which is when i think of
21:41
economies of scale i’m never really just
21:43
necessarily thinking about one property
21:44
i’m thinking about them all
21:46
mixed together right you know i’d say
21:48
you start start achieving that about a
21:50
thousand to two thousand units and
21:52
then and then it just gets you know uh
21:54
better from there
21:55
yeah right you know because you can go
21:56
back to that landscaper and say hey
21:58
i’ve got a 10 pack of properties you
22:01
know
22:01
you’re charging me 2 500 for each
22:04
individual deal i’m giving you 10
22:06
right now what can you do for me okay i
22:08
can do that for 1500 bucks
22:10
you know boom you just saved a thousand
22:11
dollars per property not bad
22:13
right you know and that stuff actually
22:15
happens that’s what we do and we’re
22:16
doing it on the management side too
22:18
right
22:18
that’s why you build up some mass on the
22:20
management side so you can go out you
22:21
have purchasing power
22:22
with these vendors and these supply
22:24
houses across the country
22:26
right you know so something to think
22:29
about
22:30
so let’s see who else we have comments
22:31
questions let us know we’ll answer them
22:33
just fine um i do see one question from
22:36
jefferson
22:37
or a next future topic step-by-step
22:40
checklist
22:41
from loi acceptance to day one that you
22:43
own the property
22:45
i don’t know if that can be covered in a
22:47
30-minute show but you know
22:48
oh it’s basically the process from loi
22:51
to
22:52
owning the probably talk about the key
22:53
things right like what happens after you
22:55
have an accepted lie between dd
22:57
and closing i guess it’s kind of really
22:59
it’s what happens during dd what happens
23:00
during closing i think that’s the
23:01
question that’s hot interpreting yeah we
23:03
could do that you can do that
23:04
definitely a topic we’ll do that so
23:06
let’s see so who else has comments
23:07
questions let us know
23:10
otherwise we will keep going ben
23:13
toolkit all right disrupt equity.com
23:17
toolkit check it out shannon does a
23:19
great job curating it we got our we got
23:21
the checklist i don’t know if we have
23:23
that one but we will
23:24
certainly once we do it for a show we
23:26
will add it to it
23:28
um our webinar replays including these
23:30
right you know it’s all going to be
23:31
there
23:31
podcasts that me and ferris are on we
23:33
talk about all kinds of crazy stuff on
23:34
these podcasts they throw all kinds of
23:36
curve balls at us and a lot more right
23:38
you know and it’s completely and totally
23:40
free
23:41
so check it out there if you would
23:43
disrupt equity.com
23:45
toolkit so talking about
23:48
next week oh my gosh
23:52
we’re talking about top investing
23:53
metrics in commercial real estate and
23:55
how to use them
23:56
so this one’s an important one right
23:57
kpis your your metrics your numbers that
23:59
matter in real estate so
24:01
no and this is important folks this kind
24:02
of goes back to not only just on
24:04
on you know what we look for on
24:07
the projections right on the return side
24:09
but i think we can maybe sprinkle in
24:11
some asset management
24:12
you know metrics as well i think it’s
24:13
important at least trade out
24:15
you know that type of stuff right why
24:17
why do we track this stuff why is it
24:19
important
24:20
and how do you guys ultimately calculate
24:21
this stuff so you know
24:23
trying to kind of get into some more
24:25
underwriting too which we’re going to be
24:26
doing some more underwriting as well
24:28
you know so check that out but uh any
24:30
other comments
24:31
questions all right all right
24:35
so we’ll go ahead and crack it up i love
24:38
it i love it see you guys next time
24:39
thank you all next week we’ll see you

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