Learn how to invest in Class A Multifamily Properties like the ones above.
Become a limited partner in someone else’s deal.
-
Put your money with a proven operator, and you will get a return.
-
Don’t deal with the 3Ts “Tenants, Termites, or Toilets”.
-
Understand the different asset classes
-
Learn what a good market looks like
-
Know what the typical expense ratios look like for any asset class
-
Learn things outside the box like how to
-
Add additional incomes
-
Increase Operating Income
-
Reduce Expenses
-
Execute on the business plane
-
Successfully implement rent increases
-
We highly recommend doing this before you become a general partner.
“Please make sure that you work with an operator whose goals align with your own. If you are looking to buy Class A assets don’t get with an operator who is doing Class C. Also, if your goal is to run your own operation and to do your own deals then look for an operator who is willing to mentor you.”
How can you invest and how much money do you need
-
Typically, you can get into a multi-million-dollar property with as little as $25,000 dollars. Typically, the bigger Class A properties require $100,000 minimum investment. You can invest in what is called a syndication where you own a percentage of the investors LLC, that owns the property. This is the easiest way to get in the game. This is how I got started.
-
You can start by using your retirement account and rolling it over to a self-directed IRA or 401k. Once you have the account rolled over to a self-directed retirement account you can then use this to invest in these assets. The best thing is that there is zero tax penalty for rolling this over, the returns from the investments grow tax free, and you control what you invest in.
What to watch out for
-
It is important that you have a very good understanding and knowledge of who the operator is.
-
Ensure that they “have skin in the game” and they are investing in their own deals.
-
What is their track record, what kind of assets have they managed in the past, and what kind of returns have the generated.
-
Aim to get to know our operator on a personal level
-
What is the business plan for the asset.
-
Know the market that the deal is in
-
Understand the opportunity and the risk and make sure to have multiple conversation with the operator to understand how they are underwriting the deal
-
Ask for a copy of their underwriting and analyze it
-
Lastly, make sure the opportunity aligns with your goals.
What to Expect when investing as an LP
The type of returns we offer our investors are below: You should expect similar returns
-
For Class A Properties with lower risk, you are looking for at least a 4.5% Cash on Cash returns paid quarterly and at least a 2.5x multiplier of your money with a 10-year hold. That is to say that you should expect at least 4.5% year over year return on average and expect at least two and a half times your money in a 10-year period. That is if you invest 100K you should expect a yearly return of $4,5000 minimum and a total return of $250K once you are out of the deal.
-
For Class B Properties with medium risk, you are looking between 6% -8% Cash on Cash returns paid quarterly and at least a 2.0 -2.5 x multiplier of your money with a 10-year hold. That is to say that you should expect between 6% and 8% year over year return on average and expect at least to get at least double your money in a 10-year period. That is to say that if you invest 100K you should expect 6K to 8K a year for 10 years and overall proceeds of $200K minimum
Before you try to manage your own assets. you should invest as an LP in at least 2 properties to learn what a successful operator is looking for and understand how they communicate with investors to ensure the provide fiduciary guidance to the investors’ money.