In this video, we delve into the fundamentals of multifamily real estate, exploring key strategies for successful investments and the nuances of structuring a robust real estate investment fund.
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Transcript:
00:00
bear with us a little bit about you what got you started in this multifamily? And then especially what have you started? What have you decided to start a fund
Chris Bounds 00:11
multifamily? Like my wife and I, we did 200 flips or so I mean, maybe a little bit less at the time when this whole thought process be going through my head. But I’ve been watching other folks, some friends, my mutual friends, people, you know, go up and go into different asset classes, multifamily short term rentals, self storage, mobile, home parks, private money, lending just various things. And most of them got started in single family, and I’m over here at laser focus on household. My wife and I, we’re gonna realize, like, hey, this house flipping thing, yeah, it’s kind of cool. But it’s a job now. Like, it’s a job. And there’s really, there’s nothing passive about, like, the moment we stopped doing the activity, we stopped getting the results from the activity, ie money. So we must keep doing that. And there’s nothing wrong with that.
But it really wasn’t why we got in real estate to begin with. We got into real estate to build wealth and passive income. And house flipping was not that solution. It was the it was the solution that helped me quit my job and go full time it achieve that. But that was many years before. And here we are. We built this like house hoping machine like. So what do we do? So we started winding down the house flipping and moving over into more buying holds it was originally single family and then having more conversations with folks that have gone into other asset classes, and just really the bog was there. But we still were focused on single family. And just, that’s what I knew. And it really came down to a point where COVID happened, I decided, hey, look, I’m just gonna shut up this whole flipping thing altogether, we’ll just hold. Those have been our best deals anyway. And then it was just kind of like, perfect storm of events where we’re no longer flipping, we know where we want to go in the long term hold. And then a buddy of ours, it was in a mastermind, he at the most recent mastermind, he said, house loving has made me millions, I’m thankful.
And I’m shutting my business down. And then he went on to say everything that my wife and I were thinking that it was a job. It didn’t it wasn’t building wealth outside of just the cash per deal. There was no long term value of the business. And he was moving everything over into multifamily and self storage units. He was doing both of those. And we were like, wow. And then it was probably about 12 months after that. That same guy had a deal, a very good deal that came across our desk, or he brought it to us. He was like, hey, look, we’re doing this deal. Do you want to come along with us. And our Meanwhile, our private lenders, we were turning their money three or four times a year. And householding, we just ended up in and out in and out. They’re making lots of money now or not. And they’re like, hey, when’s your next deal?
I’m like, I’m just not buying as many houses. And but we now we have this deal. We had this opportunity that it was 300 383 97 units. Something like that. 380 units in Daytona Beach, Florida. And it was Class B. And it was a repositioning play. And the operator had 40 years of experience. And they owned 1000 units locally. And then we had the opportunity to come in 5050 with them on this deal that they already owned. Wow, reposition capital. I’m like, All right, well, I don’t have to worry about them being new and making newbie mistakes and been in business for 40 years. I trust the guy who brought me the deal. So his money is in it. his partner’s money is in it. And then at the same time, like I’m looking for something new. And then my investors are also looking to get their money to work. So all these little things kind of came into play started a fund that was the first was a fund to fund structure worked out really well. We had a lot of tailwinds to the market too. So that added some cherries on top of the deal. And that was our first one. It went really well. And it gave the clarity on where we wanted to go forward, which is where we’re at now.
04:13
Wow. And how long ago was that?
Chris Bounds 04:15
That investment was 22,020. And then okay, it was a five year plan. It lasted 18 months or maybe 16 years. So we achieved five years of results in 18 months. Again, that’s just market tailwinds. And we didn’t do anything special, right? It was a good deal when we bought it. It would have been a good deal had we hold it? It just became a an amazing deal just because the market market tailwinds take it like when that happens, take it. Don’t bet on that. But definitely take it. So
04:46
we did. That’s awesome. Yeah, and then so that was an SPB font. And now you’re doing a traditional font, correct? Yes.
Chris Bounds 04:56
Well, it’s a little different than what you see normally, so I had to go back counted, like, hey, look, if I’m going to do this, how am I going to add value? Like, I don’t want to do the same, I don’t necessarily want to do the same thing that everybody’s doing. I used to ask this when I was, you know, heavy in the household, and it was like, raise your hand if you can offer all cash inflows in seven days, like everyone’s hands going up. And I was like, Alright, how you different? All right, any of you different when you’re talking to a seller like you can all you everyone can offer that like, differentiate? Differentiate yourself. So how am I going to approach the marketplace a little bit differently?
Do I really do I want to go out and find these deals? Like there are people who’ve got even newer folks in the market? They’ve got five 710 plus years experience broker relations on me, do I want to go into that? Maybe not, I can do that. But that doesn’t I don’t want that to be my differentiator. Do I want to go in and be the property manager? Hard? No, like, definitely don’t want to do that. I’m not a construction guy. But I have raised 19 million over the years. And I’ve got a perfect track record with my capital partners, both private money lenders and equity partners over the years. I was like, Well, why don’t I combine my experience with that, and also asset management and planning in also, in some circumstances, boots on the ground observation and due diligence. So that’s what I pieced together with an open ended fund that looks and feels a lot like a REIT, what you would see with a traditional REIT, but it’s still private equity, it’s 506 C. So we can provide our investors with consistency with a consistent blended investment portfolio, risk adjusted blended investment portfolio, targeting workforce housing