In this video, we’ll guide you through the essential steps and strategies to successfully transition into the world of multifamily real estate.
Discover the key factors to consider, property management insights, and tips for scaling your portfolio.
Whether you’re a seasoned investor or just starting out, this video will equip you with the knowledge you need to thrive in multifamily real estate.
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Transcript:
Chris Bounds 00:00
Did you jump straight into multifamily?
00:03
Or do my first passive investments were all multifamily? Okay, so
Chris Bounds 00:06
you haven’t bought any single family.
00:09
I’ve never bought a single family I didn’t the houses I live in. Never I shouldn’t say that I was once invested in a single family fund. So they syndicated a deal. But unfortunately with COVID, and then the rapid increase of value of houses, the model was broke, right. So you know, their goal was buy a house with a 200,000 ARV and a 1% rule. Well, that all went out the window and real estate in Texas, you know, quadrupled in value.
So that funds but that was the only thing I did in that space was I put some money into a syndication for that. And it was one of my more, you know, I gave me a 5% cash on cash at the end. And I think if their Buy Box didn’t break, it would have been a much better thing. But what just, you know, it’s a numbers game on the single family side, right, buy it for x, lease it for y, and that’s how
Chris Bounds 01:00
it works. And then multiply that times hundreds. Yeah. single family house to $200 a month. That doesn’t really do a lot. It’s mainly a it’s a long term play. Yeah. But I’ve
01:13
never met anybody in the single family space that now is in the multifamily space that says I wish I would go back to the single family space, right? Nobody. I mean, I’ve got a friend, two friends, and they never heard of multifamily. And they connected with me to meet up about a year ago and said, you know, we heard about this multifamily thing. We want to learn about it. And they owned and self managed 116 homes. And the biggest they had was an eight Plex.
And and you know, it was a lot they still do they still have them. They’re still some, you know, some of them, they’re moving away. But you know, there’s a economy’s in scale, right. And it you know, grows you quicker and it reduce your risk, right? If you have 100 apartments, and you have 10 vacant, which is a lot you’re still 90% occupied. Right? If you have 10 homes, you know, and you’ve got it really can’t hurt. So there’s a lot of economies of scales in the multifamily.
And I’ve invested in other asset classes, as well, just because I wanted to be a little more diversified than having everything in multifamily with you know, the number of syndications I’ve done.
Chris Bounds 02:21
Yeah. And there’s pros and cons to both on I’m like you are I still have single family rentals, I’m slowly getting rid of them, and transferring those into our fun, which is really focused on multifamily right now. But there’s definitely pros and cons to both. A lot of folks do feel like single family, it’s the required step into multifamily. And I’m like, No, you don’t have to do that.
You can, yeah, their skills, you’re gonna I mean, you have gained valuable skills in the corporate world and brought it into real estate. There’s obviously skills you can bring from single family and bringing into multifamily, but it’s not required, you can get your skills elsewhere, you can work for companies, but for those that multifamily and that is where they want to be. But they feel like they have to go the single family route. In any advice there.
03:16
Yeah, so you know, if I, again, to go into the multifamily space, at some point, you either had to have a network of people you can raise a lot of money from, or you need to have some money yourself. So I started out, you know, I got a pay day when the company got bought out. So you know, I had money, so I was able to invest. If I was starting as the like, brand new young person and I was 18. Again, I’d start out, you know, the bigger pockets, I’d be starting out with House hacking, and I’d be starting out with I buy a duplex, and I buy a four Plex.
But I would hope that I would get to the epiphany of multifamily a little bit sooner. But it’s a great way for someone to start, you know, and starting is the most important part of this, right, and then continuing and then doing the best you can to maximize time for value on the single family space. You it’s a lot of time, right? And you still have to put time and energy into it unless you hire management companies. But the margins are so low that they tend to eat up a lot of the profits.
So you’re only getting the appreciation game which is still substantial, but it’s it’s it’s a little more risky when you do it. But again, I don’t say not do it. I just say do it, get your base, build up some of your net worth build up some of your skill set. And you know, instead of getting 100 homes, you know go from that duplex to a four Plex to an eight Plex to a 16 Plex to a 32 Plex.
Think of the math that way. And then once you start amassing those things, then you’ll connect with partners because you can do a lot of that on your own or with a small group of friends. And then you syndication is a team sport. So I At some point, now you need a team, you need partners. And then you can go ahead and utilize those partnerships to get into the bigger space. Yeah, in
Chris Bounds 05:09
the team sport that really plays into how it would be difficult to jump with no skills or experience directly into multifamily. Just because at some point, you have to add some value. So if you don’t have if you have cash, that’s value, if you have a good balance sheet, that’s, that’s value. If you’ve got good manage construction management, project management, asset, asset management, that’s value.
But if you don’t have any of those things, it’s difficult unless and this is the one thing that a new investor could do, and it’s gonna be challenging, but you could do it, and that’s get the deal. Now, you’re probably not going to go have brokers of 200 plus units really entertain you, if you don’t have any experience, it’s just gonna be difficult to get in that door. But smaller multifamily, the 1020 30 unit and anything sub 50 You probably could,
06:04
yeah, you definitely can. And you can definitely like, like, unfortunate and unfortunate same time. So I live in Austin, Texas, right, one of the hottest markets in America. So that’s great, because there’s lots of activity, there’s lots of value. But you know, if I lived in Wichita, Kansas, you know, it’s a smaller market.
So I would have stood a better chance of finding that mine operator, just because big operators aren’t drawn to smaller markets. It’s much and and so you know, again, you know, real estate in your neighborhood is the easiest thing to start with. But it doesn’t always make sense, right? If you live in Los Angeles, this statement or San Francisco, you know, that’s a super chat. Do people still do it? Absolutely. And are they successful? Absolutely. It’s jus