How is it possible that a 27-year old with no experience or capital can close his first deal, a 69-unit apartment building?

Patrick Duffy grew up in Southern California before heading east for college. After graduating from Harvard in 2013, he returned to SoCal to work as a residential loan analyst. Before long, Patrick was unhappy at his job, and he started to look for a way to replace his income with real estate. After considering single family rentals, he decided that multifamily was the fastest way to achieve his goal. 

But he had two problems: he didn’t have any experience or the capital for apartments. That’s when he discovered Michael’s partnering program, which would raise all of the capital if the deal met his criteria. This gave him the belief to swing for the fences, and he took action, eventually locating this 69-unit property in Memphis.

In this episode, Patrick describes how he found the deal, and how he partnered with Michael to close on his very first deal – only 6 months after deciding to pursue apartment building investing. That first deal has changed the game for Patrick and today he is confident he’ll reach 1,000 units in the next 12 months.  

Key Takeaways

[3:30] How Patrick landed on the partnering strategy to finance multi-family

  • Briefly considered flipping single-family
  • Preferred multi-family, but biggest block was capital
  • Looked at creative financing options
  • Partnering seemed like most feasible route
  • Goal to secure 100 units in two years

[6:04] How Patrick found the Memphis deal

  • Clarity re: how to analyze deals
  • Practiced via LoopNet (comparing markets, packages from brokers)
  • Underwriting to get feedback
  • Memphis market seemed ideal (cap rates, unit sizes, price)
  • Reached out to learn about Memphis market
  • Found 69-unit deal on LoopNet
  • Submitted to Syndicated Deal Analyzer
  • Positive feedback from forum
  • Called broker on New Year’s Eve

[9:23] Why Patrick continued to move forward

  • Nothing to lose
  • Deal met criteria for partnering via Michael’s Deal Desk
  • Act ‘as if’ approach to secure LOI

[11:13] Michael’s partnership with Patrick

  • Impressed by Patrick’s thorough research
  • Surprised by return (Memphis not one of published geographies)
  • Got contract from seller, proposed changes
  • Built team as went (property manager, lawyer)
  • Patrick took initiative
  • Under contract with seller
  • Wire EMV
  • Collect due diligence docs
  • Financial due diligence process
  • Create investor package
  • Met in Memphis to look at property
  • Michael sent sample deal package to investors
  • Acquired financial commitments
  • Hired SEC attorney
  • Started appraisal process

[13:18] Patrick’s experience working with investors

  • Michael’s network eager for deals that fit criteria
  • Addressed questions about specifics of market
  • SEC attorney had drafted necessary documents
  • Used DocuSign to track eSignatures

[15:23] The closing process for the Memphis 69-unit deal

  • Loan approved, investors wired funds
  • Patrick received acquisition fee of $23,000
  • Also reimbursed for expenses incurred during due diligence

[16:25] The impact of doing your first deal

  • Only so much can be taught re: what to expect
  • Once learn to partner, can scale quickly
  • Feel more comfortable and taken more seriously
  • Brings down barriers
  • Patrick under contract on 196-unit deal two weeks later
  • Expects to hit 1,000 units in next 12 months

[19:50] Why size isn’t a factor for Patrick

  • It’s about process
  • Anything under 500 units is viable
  • Don’t worry about equity
  • Finding deal is the issue (not money)

[21:35] Patrick’s advice for aspiring multi-family investors

  • Take advantage of Deal Desk resources
  • Does require high level of commitment
  • Hard work is worth it

Connect with Patrick

Email: pduffy32@gmail.com

Resources

Deal Desk

Syndicated Deal Analyzer

Ultimate Apartment Investing Course

The Financial Freedom Summit Live

LoopNet

DocuSign

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

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