Apartment Building Investing with Michael Blank https://themichaelblank.com Invest in Apartment Buildings with Private Money Thu, 13 Feb 2020 16:02:23 +0000 en-US hourly 1 Michael Blank’s passion is being an entrepreneur and helping others become (better) entrepreneurs. His focus is apartment building investing by raising money from private individuals. He’s been investing in residential and multifamily real estate since 2005 and began syndicating deals in 2010. He is the author of the Syndicated Deal Analyzer and the free eBook “The Secret to Raising Money to Buy Your First Apartment Building”. Through Michael’s blog on TheMichaelBlank.com, his weekly articles on the BiggerPockets.com, and his Podcasts, Michael is enthusiastic about sharing what works (and doesn’t work!) in the world of commercial real estate investing. Michael Blank: Commercial Real Estate Investor | Entrepreneur clean Michael Blank: Commercial Real Estate Investor | Entrepreneur mblank@neuron.com mblank@neuron.com (Michael Blank: Commercial Real Estate Investor | Entrepreneur) Copyright 2014 by Michael Blank. The Ultimate Guide to Apartment Building Investing with Michael Blank Apartment Building Investing with Michael Blank https://themichaelblank.com/wp-content/uploads/2020/01/Apartment-Building-Investing-Artwork-2020.jpg https://themichaelblank.com TV-G Northern Virginia How to Project Your Passive Investment Income https://themichaelblank.com/strategy/how-to-project-your-passive-investment-income/ https://themichaelblank.com/strategy/how-to-project-your-passive-investment-income/#respond Thu, 13 Feb 2020 15:14:15 +0000 https://themichaelblank.com/?p=11287 You might be asking, is it really possible for a passive investor in multifamily real estate to become financially free? The short answer is YES, but the amount of time and money it takes is different for every investor.

Today, I’m going to help you answer this question for yourself.

You’ll meet people that are living the dream and you'll learn from their experiences. I’m also going to go over some assumptions about the returns you can expect from your multifamily investments. And finally, you’ll leave with a free calculator to help you create your own roadmap to financial freedom.

Ready? Let’s DO THIS!

Real-Life Examples

Quitting your job and achieving financial freedom through passive investing is a real possibility. 

I’ve interviewed several people that have done just that. They have literally quit their jobs and retired from being a doctor, dentist, and an attorney through passive investing alone.

Check out the interviews for yourself on my Podcast. Their lessons are invaluable!

Early retirement through passive investing isn’t just a thing, it’s a real strategy. And a lot of these people have quit their jobs in three to five years simply by reinvesting. I'm not talking about hundreds of thousand dollars a year, I’m talking a $50,000 re-up in their investment whenever they can, over time. 

These multifamily syndications are so powerful because they can produce amazing cash-flow and wealth in such a short period of time. The question is – why aren’t more people aware of multifamily investment as an option? If you think about who’s producing most of the financial education, the large financial institutions, then you have your answer.

Large financial institutions are incentivized to educate people to invest in Wall Street. My motivation, and our mission at NightHawk Equity, is to show people how to become financially free through this amazing investment vehicle – multifamily syndications

If you haven’t already, download the special report I have put together for you that compares the investing in Wall Street versus Multifamily Real Estate.

Special Report: What’s the best investment? The Stock Market or Real Estate? 

Projecting Wealth

In the video, you can see a spreadsheet that I use to make calculations about projecting wealth through passive investing. Check that out to follow along.

Here are the assumptions I use:

  • Investing $50,000 a year
  • Average cash-on-cash of 7%
  • Projects are refinanced after 2 years
  • Return is 50% of the original capital = $25,000

Let's further assume that you're selling these projects after 5 years, which is typical for a syndication. When the project sells, it’s likely to net you an 8% average annual return. The proceeds, combined with the $25,000 made during the refinance, means that you’re now looking at an annual average return of roughly 15%.

This is the criteria for almost all of our projects, and these assumptions are actually fairly regular. 

As a passive investor, you’re going to be very happy with these returns. Naturally, you may consider reinvesting these proceeds to keep the streak going and continue the momentum. By doing that, you can create a mini cash flow projection. 

The thing to notice is your cash-on-cash return starts at 7%, and continues like that in Year 2. But then, it starts to go up a little bit. That’s because in Year 3, you're starting to refinance and have done your first project.

Then in Year 4, you’ve refinanced a second project. You’re getting the proceeds from the refinance and your return jumps even higher in Year 5, because that's the year you actually sell your first project.  

Now, look and see what happens to the cash-on-cash return after that point. It doesn't just stay at 20%. It keeps compounding and it hangs out at a 25-30% cash-on-cash return. 

AMAZING!

Creating Your Plan

If you want to make a plan in motion for becoming financially free, I invite you to download the spreadsheet that you see in the video. You can change all of the parameters to reflect whatever numbers you feel comfortable investing every single year. 

But it’s not just about planning for the amount of money that you are putting in every year. It’s also about projecting your realized profits and cash flow. If you’re trying to generate $100,000, for example, you can see that at the end of Year 8 I generated that exact amount. That’s a 25% cash-on-cash return on the $400,000 that I invested.

Take some time to download the spreadsheet and play around with it. You can very quickly see what happens to your net worth.  

Download the Passive Income Calculator

If you’re interested in becoming a passive investor in our deals, let’s schedule a call. Go to our website, www.NightHawkEquity.com, and select the “Join” button to start the process. 

Thanks for taking the time to educate yourself, and we’ll see you on the next video!

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MB 200: Best of 2019 – With Ken McElroy, Robert Helms, Kyle Wilson, Robert Kiyosaki, Hal Elrod & Grant Cardone https://themichaelblank.com/podcasts/session200/ https://themichaelblank.com/podcasts/session200/#respond Mon, 10 Feb 2020 13:00:26 +0000 https://themichaelblank.com/?p=11029

What do the most successful among us have in common? The biggest of the big-name real estate investors and influencers I’ve had the pleasure to interview on this podcast share one thing—a mission beyond money. Yes, financial freedom is important. But without purpose, what’s the point?

On this episode, I’m celebrating our 200th show with a highlight reel of the best Apartment Building Investing podcasts from the past year. We look back at my interview with Rich Dad Advisor Ken McElroy as he shares how his thinking has evolved around financial freedom and what it means to be successful, and return to my conversation with Robert Helms of The Real Estate Guys around his mission to both educate and inspire action.

We revisit legendary entrepreneur and investor Robert Kiyosaki’s insight on spiritual discipline and bestselling author Hal Elrod’s take on the REAL purpose of setting goals. Listen in for marketing icon Kyle Wilson’s advice on building a platform and get inspired by billion-dollar investor and influencer Grant Cardon’s definition of true wealth.

Key Takeaways

What financial freedom means to Ken McElroy

  • Initial goal to be own boss, cover expenses
  • Scale business as expenses increase

How Ken McElroy’s definition of success changed over the years

  • From ‘job’ to ‘good job I really enjoy’
  • Shifted to focus on money, being millionaire
  • Now involves relationships with family + kids

What gets Ken McElroy out of bed in the morning

  • Sense of purpose
  • Desire to contribute

The Real Estate Guys’ mission

  • Put education to work via effective action
  • Create community + collapse time frames

The secret to Robert Helms’ success

  • Recognize economic reality beyond real estate
  • Understand other investing opportunities

How Robert Kiyosaki learned spiritual discipline

  • Marines focus on mission to bring fellow man home
  • Business world only mission to make money
  • Boundary of life + death gets in touch with God

Robert Kiyosaki’s take on the three kinds of money

  1. Gold + silver = God’s money
  2. Government money = fake
  3. People’s money (e.g.: Bitcoin)

Hal Elrod’s insight on the REAL purpose of setting goals

  • Develop qualities + characteristics of goal-achiever
  • Growth on journey more important than hitting target

Hal Elrod’s take on why traditional affirmations don’t work

  • Taught to lie to ourselves, use passive language
  • Affirmation must be paired with action

Kyle Wilsons’ insight on the principles of marketing

  • Provide great product, customer service
  • Be consistent + relational

Kyle Wilson’s must-haves for a website

  1. Mystique
  2. Taglines
  3. Social proof
  4. Creative opt-in

What gets Grant Cardone out of bed in the morning

  • Build legacy for family, church + community
  • Produce something of value = live forever

Grant Cardone’s definition of wealth

  • Money, time, love, health, fun and PURPOSE
  • Keep learning to contribute on another level

Resources

Enter to Win a Free Copy of Michael’s Book

Michael’s Ultimate Guide to Apartment Building Investing

Ken McElroy on ABI EP133

Robert Helms on ABI EP156

Robert Kiyosaki on ABI EP160

Hal Elrod on ABI EP165

Kyle Wilson on ABI EP184

Grant Cardone on ABI EP188

Warriors Heart

Jim Rohn

Zig Ziglar

Chris Widener

Ron White

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

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https://themichaelblank.com/podcasts/session200/feed/ 0 What do the most successful among us have in common? Today, I’m celebrating our 200th show with a highlight reel of my top interviews from the past year. Listen in as we revisit my conversations with Ken McElroy, Robert Helms, Robert Kiyosaki, What do the most successful among us have in common? Today, I’m celebrating our 200th show with a highlight reel of my top interviews from the past year. Listen in as we revisit my conversations with Ken McElroy, Robert Helms, Robert Kiyosaki, Hal Elrod, Kyle Wilson and Grant Cardone around mission, purpose and personal growth. Michael Blank: Commercial Real Estate Investor | Entrepreneur 41:12
MB 199: What’s Working Now to Get Deals Under Contract – With the Michael Blank Team https://themichaelblank.com/podcasts/session199/ https://themichaelblank.com/podcasts/session199/#respond Mon, 03 Feb 2020 13:01:00 +0000 https://themichaelblank.com/?p=10919

With more buyers than product on the market, finding good real estate deals can be difficult—especially for newbies. But it’s not impossible. So, what can aspiring multifamily investors do to get a deal under contract?

Drew Whitson, Josh Sterling, Andrew Kuhn and Phil Capron are mentors for The Michael Blank Investor Incubator, Josh Thomas handles our mentoring program strategy calls, and Drew Kniffin and Garrett Lynch serve as President and Director of Acquisitions, respectively, at Nighthawk Equity, the investing arm of The Michael Blank organization. All seven are full-time multifamily investors themselves with a background in working with new real estate investors.

On this episode of Apartment Building Investing, I’m sharing the panel discussion we had last year at Deal Maker Live around what’s working now to get deals under contract. We discuss the greatest fears facing new multifamily investors and explain how we coach our mentoring students to get brokers to take them seriously. Listen in for insight on building your investor list to raise money for deals and learn how to leverage joint venturing to get into multifamily real estate.

Key Takeaways

The biggest fears facing new multifamily investors

  • Self-confidence (work on inner game first)
  • Won’t be able to raise money
  • Won’t be taken seriously

How to get brokers to take you seriously

  • Analyze deals on broker sites
  • Be specific re: your criteria
  • Send feedback within 48 hours
  • Travel to meet face-to-face

The hierarchy of quality in multifamily deals

  1. Direct off-market from seller (rare)
  2. Broker first look
  3. Broker’s website
  4. LoopNet

Our mentoring team’s advice on raising money

  • Build investor list around existing contacts
  • Have conversations BEFORE need capital
  • Give talk on multifamily at Meetups
  • Leverage partnering or joint venturing

Connect with Michael’s Mentoring Team

The Michael Blank Investor Incubator

Deal Maker Live

Resources

Syndicated Deal Analyzer

Nighthawk Equity

The Michael Blank Deal Desk

Anthony Metzger on ABI EP196

LoopNet

David Kamara on ABI EP182

Meetup

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group

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https://themichaelblank.com/podcasts/session199/feed/ 0 What’s working NOW to get real estate deals under contract? Today, I’m sharing the panel discussion my mentoring team had at Deal Maker Live 2019 around the challenges newbie investors face. We cover what our mentoring students are doing to be taken se... What’s working NOW to get real estate deals under contract? Today, I’m sharing the panel discussion my mentoring team had at Deal Maker Live 2019 around the challenges newbie investors face. We cover what our mentoring students are doing to be taken seriously and how they’re raising money for their first multifamily deals! Michael Blank: Commercial Real Estate Investor | Entrepreneur 27:40
What Can Go WRONG in a Multifamily Deal? https://themichaelblank.com/analyzing/what-can-go-wrong-in-a-multifamily-deal/ https://themichaelblank.com/analyzing/what-can-go-wrong-in-a-multifamily-deal/#respond Fri, 31 Jan 2020 03:38:45 +0000 https://themichaelblank.com/?p=11013 It wouldn’t be 100% truthful for us to say that every multifamily deal that we do works out. Or, that every single investor makes the exact amount of money that we hoped they would make. It’s just not true

Not every deal goes the way we plan. It’s just the reality of our business. 

Today, I’m going to share 3 examples of deals that went south. We’ll talk about what went wrong and what we did about it. Because anyone can share their best stories. Learning from other’s mistakes, and our own is how we all get better.

The Tenant From Hell

A friend of mine, Paul Moore, is also a multifamily syndicator with a podcast called “How to Lose Money.”  I’ve been a guest on there, twice!  (Some of you know I lost money in the restaurant business, which we talked about on Paul’s podcast.)

The other example I shared with Paul was actually my very first deal.  In the episode, I go pretty heavy into what happened. It was a 12 unit deal in Washington DC and I think more went wrong in that one deal than in ALL the deals I've done since then, combined. It's insane. It was such a nightmare. 

Long story short, it was a tenant that made my life completely miserable. We were losing money. He was suing me and not paying the rent. He was organizing the other tenants. Couple this with DC, where the laws are very pro-tenant and anti-landlord, it made for a very difficult couple of years.  

We missed our financial projections during the first 2.5 years of a 5-year project. Obviously, we missed our pro forma by a mile. Now, we did okay because we were able to increase the value of the building by the time we sold, but the returns were still not as projected. 

To make it right for my investors, I simply took my share of the profits and gave them to the investors. And so, that's what happened. That definitely did not go well – for me anyway!

Biting Off More Than We Can Chew

I have a more recent example of a deal gone bad. A lot of people don't know about this, but it was just a year ago. We took a swing at a really large deal. It would have been the largest deal to date, and we really worked hard on it for nine months.

I won't say exactly where it was, but it was somewhere in Texas. It was really an order of magnitude. The deal was simply too big and it really wasn't a great deal. We struggled to raise money. We tried to go down a private equity path and got a black eye from it. 

Ultimately, we lost six figures in deposits and due diligence costs that we never got back. Ouch. We don't talk about this one a lot, but we certainly learned a great deal from it.

Lender Woes

Sometimes, we inflict misery upon ourselves, right?  Other times, there are things that happen outside of our control. 

For example, we did a deal in Huntsville a few months ago. In the 11th hour, the lender reduced our loan proceeds significantly. They changed the terms from 80 / 20 LTV (Loan to Value) to 65 / 35 LTV. 

That's a pretty big haircut right there. 

We were short by nearly $400,000. This was money that we were going to use to improve the property. It really impacted our ability to execute our business plan. There was no way to get $400,000 out of free cash flow from the building and still make the projections for the investors. 

We decided to pay out the distributions to the investors, but we really weren't executing on our business plan. And in the short term, that's great. The investors were happy to get distributions.

But in the long-term, it's bad because we're actually not adding value. 

At one point we surrendered and realized this had to stop. But we didn’t want to punish the investors by cutting distributions. Instead, we decided to corral the GPs (General Partners) and make a loan.

We made a $250,000 loan over the next 18 months to recapitalize the asset.  And sometimes, you gotta do what you gotta do to make the project right, and take care of the investor.

That's probably the number one lesson: make sure that you satisfy the investor – even if you have to dial back your own profits to do so. 

At least, that’s our philosophy. We build our business to get repeat investors. They stay in because we take care of them. If we don’t, it makes it much more difficult to build a business that lasts.

Lessons Learned

“You live and, hopefully, you learn.”

I love this quote. In living, you have to accept the fact that you're gonna make mistakes. Without mistakes, you don't really live well. You live in fear, or you never really live at all, because you're too afraid to make mistakes. 

You have to accept the fact that you're going to make some kind of mistake and just be at peace with it. That's lesson number one. Number two is definitely to learn from those mistakes.  

The worst is not making a mistake, but making the same mistake twice. 

The other lesson, at least philosophically, is to always take care of your investors or customers and to put them first. And sometimes that's difficult to do because it may come at your detriment. 

Mistakes are inevitable. Accept them. Do the best you can, and learn from them. 

Thanks for joining me today. If you haven’t downloaded your free copy of my report that compares real estate investing to the stock market, check it out here: www.themichaelblank.com/report

If you feel ready to start investing in multifamily real estate, let’s set up a phone call. Go to the NightHawk Equity website and select “Join the Investor Club” to get that scheduled. We look forward to working with you in the future and we'll see you in the next video!

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How I Bought an Apartment Building Without My Own Money https://themichaelblank.com/articles/how-to-buy-apartment-building/ https://themichaelblank.com/articles/how-to-buy-apartment-building/#comments Wed, 29 Jan 2020 11:15:00 +0000 http://www.TheMichaelBlank.com/?p=815 This is my story about how I bought a 12-unit apartment building with money raised from private individuals.

This deal closed against all odds and then nearly bankrupted me.

Don’t make the same mistakes I did and learn how to raise money to buy your first apartment building.

Finding the Property

One day in March 2011 an email came in from real estate investor friend (we’ll call him “Frank”) who learned of a 12-unit apartment building in NE Washington DC. Even though I get the vast majority of deals through my brokers, every once in awhile there’s an exception

My investor friend positioned the deal as a rehab flip (i.e. buying it, fixing it up, and selling it for a profit), which is what I also do occasionally.

Another investor he knew (“Richard”) had it under contract. The seller was asking $500,000. Frank had a marketing agreement in place with Richard that if he referred a buyer, he would be paid a marketing fee (nice, huh?).

I ran the sample rent roll he sent me through my