If you’re new to the multifamily investment business, then it’s easy to look at the scope of possibilities out there and stall out before you even get started. If that’s you, then the best way to get unstuck is to take concrete, deliberate action.
Here are 4 things you can start doing today
to get your business in gear:
1. Hit the Books
There’s a lot more to succeeding in multifamily investment than a head full of information. Still, you’ll need to get yourself up to speed on a few key topics if you hope to get anywhere.
You’ve already started the learning process by reading this blog. You can find even more material in my free books on Due Diligence, Partnerships, Financing, etc. You can find those on my Books Page Here. You can also check out a few of my recent podcasts. Here are a few good choices for getting started:
- Leading a Multifamily Company with Maureen Miles
- Titans of Multifamily (500th Episode)
- Real Estate Entrepreneur at 23
As important as these types of resources are, there’s nothing quite as valuable as time spent learning from other experienced investors. To that end, make it a point to join a local chapter of NREIA or a nearby real estate investors’ meetup group.
2. Start Kicking Tires
Book learning is necessary, but not sufficient. If you don’t take the next step and translate that knowledge into hands-on practice, all you’ll have is a head full of ideas and none of the practical skills you need to start and run a successful business.
The only way to develop those skills is to get out there and start looking at deals.
Have you connected with a broker yet? If not, then now is the perfect time to start. Once you’ve got an idea of what you’re looking for (see #s 3 & 4), reach out to a local commercial real estate broker and see what they have available.
Take each deal seriously, even if the odds are low that you’ll buy right now. Do your initial due diligence—evaluate the market, take a drive by the property, assess the neighborhood, crunch the numbers; you can even meet the broker for a walkthrough.
Note: Make sure you respect brokers’ time and resources. If you aren’t ready to buy, let your broker know up front so that they don’t feel as though you’re wasting their time. You do not want to wreck a broker relationship before it even gets started.
Treat this as a dress rehearsal. Ask lots of questions and don’t be afraid to make mistakes along the way. As you do, lean on your broker for the market insight and wisdom. This is a great time to build that relationship. It’ll pay off in the future.
3. Decide on Basic Criteria
If you’re going to kick tires, you need to have a general idea of what you’re looking for.
Here are four basic criteria to decide on before you start looking:
Price – Don’t leave this up to a “gut” feeling about what you can and can’t afford. Meet with a lender and get pre-approved so you know what you can afford before you start looking.
Size – Don’t just think in terms of square footage and room counts; consider number of units as well. Anything less than 5 is considered a residential; anything above 5 is commercial. Residential plexes may be ideal for new investors, but commercial properties will ultimately make for a stronger portfolio.
Style/Condition – Are you looking for something modern or traditional; a quaint looking foursquare or a basic apartment building? Regardless of the style, how much work are you willing to take on in getting the property up to snuff?
Class – Commercial properties are broken down into 4 property classifications: A, B, C, D. These cover a range of property types, locations, and conditions, with A being on the high end of the spectrum and D on the low end.
4. Pick Your Market(s)
In addition to selecting the types of properties you want to pursue, you’ll also need to choose where you intend to find them.
Here are four market types to consider:
Backyard – Start where you live. As you gain experience and/or exhaust the possibilities in your location, you can branch out into other markets.
Hometown – Take a look at the town you grew up in. Odds are, you know it better than most other markets and will have family or friends nearby to help.
Boots on the Ground – Beyond your backyard and hometown, consider markets where you have friends and associates who can serve as your eyes and ears on the ground.
Retirement/Vacation Destination – If you know where you plan to retire, search for properties in that area. That way, you can keep an eye on your retirement portfolio without having to board a plane.
For a deeper look at picking markets and setting investment criteria, take a look at this post I wrote a few weeks ago on finding the “perfect” deal.
Try not to look at these things as a sequence of one-time actions. Instead, consider them ongoing and complementary activities.
Seek out as many opportunities to study and learn as possible.
Revisit your market choices based on the realities you encounter on the ground.
Refine your criteria as you learn more about what works in your market.
Never stop looking for and evaluating potential new deals.
Don’t overthink things at this point. Put your head down and press forward on each one of these activities. Before you know it, you’ll be ready to put your money on the table and start building massive wealth through multifamily real estate investment.