The following is an excerpt from The Vault, which contains a series of interviews with the top investors in the country. This excerpt is from the interview with a multi-family investor who has added over $1 Million to his net worth and $5,000 to $10,000 to his monthly cash flow in less than 3 years. Upon his request, his name has been changed to “Mr. X” in the transcript below for asset-protection purposes.
We’re glad to have you on the call today because you’ve had a tremendous amount of success in a short period of time. What 3 tips would you give to someone who is looking to get into multi-family investing like you did?
First thing I would suggest is start learning. It could be as simple as going to Barnes & Noble and picking up some books on multi-family investing, there are a few out there. It could be doing what I did, which is going to a boot camp. Either one, I personally would do the boot camp but you could just start with books or if you know friends or family that are also investing in commercial property then talk to them. So first thing is know something, learn something.
Second tip I would give is go visit multi-family properties. It doesn’t matter where you live, I mean even if you’re in New York City, like me, just go visit properties. Go visit properties of the kind you might buy. Pretend to be a tenant, that you’re looking for a place to live and go into the leasing office and pose as a tenant and walk properties. Just so that you begin to get a feel for what multi-family properties are like. So that would be the second thing.
And the third thing I would suggest is start making offers, start making offers just go for properties on Loop Net even if you don’t really care about them. Start talking to the brokers, ask for the financials, do your underwriting, make some offers and get into the game. And that’s the most important thing at the end of it.
Thanks! Let’s talk about your first deal. Could you please walk us through it and let us know how you found it and who helped you with it?
Sure and let me preface by saying that the stories I’m going to tell, the experiences I’m going to talk about are real world experiences. That means there were positives, there were negatives, there were successes, there were failures, there was everything along the way and I don’t want to paint a picture that everything is necessarily going to be the smoothest sailing.
You definitely have to learn what you’re doing and I definitely did. So my first deal, in fact, was the deal upon which I probably learned everything. I bought the deal basically looking in Loop Net. Loop Net is the equivalent of the MLS listing service but for commercial property. And it was a combination of looking on Loop Net and having developed a relationship with a local commercial broker in Oklahoma City. He was a young guy, he was looking to establish himself in the business and so he was willing to work with buyers to help them find properties. This is in contrast to brokers who are more established and only want to work with sellers and get the listing.
Anyway, he would go and look at properties on my behalf so I didn’t have to travel until we found one that we liked. So we found one, I bid on it, I beat out a few other people and then eventually got the loan and closed the deal. It was a 48 unit property in the Northwest part of Oklahoma City. What’s called a Class C property. 1970’s construction, brick walls, flat roof, which I would recommend most people not to buy and basically a nice quiet property in a nice quiet setting. So I bought that in December of 2004 and I still own it now.
There were good things and there were bad things about that deal. The good thing was it was a good location, good property, the kind of property where you walk into it and it just has a good feeling. You just know you bought something that has a good feeling. But I made some mistakes. Among the mistakes that I made was that the property management company that I retained, as good as they talked, did not deliver and it took me too long to find out. Then I switched them and the second one did even worse and then I switched them again to a 3rd one who was absolutely stellar. So with that 3rd company the property is just come back and is now 96% occupied and profitable and everything you want.
So some of the lessons I learned on that one was how to really pick and choose a property management company that’s going to take care of your property as if it was their own. That was the first lesson and the second lesson was really how to do your due diligence to make sure that you’re getting all the information you need to make a good buy.
Get the rest of this interview from The Vault. Learn more about The Vault and order at www.myhousedeals.com/thevault.