Apartment Building Investing with Michael Blank https://themichaelblank.com Invest in Apartment Buildings with Private Money Wed, 18 Sep 2019 15:26:28 +0000 en-US hourly 1 https://wordpress.org/?v=5.2.3 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 http://www.TheMichaelBlank.com/wp-content/uploads/powerpress/Artwork-300x300.jpg https://themichaelblank.com TV-G Northern Virginia The #1 Secret to Achieving Any Major Goal https://themichaelblank.com/videos/the-1-secret-to-achieving-any-major-goal/ https://themichaelblank.com/videos/the-1-secret-to-achieving-any-major-goal/#respond Mon, 16 Sep 2019 13:00:35 +0000 https://www.themichaelblank.com/?p=9411 What separates the people who take action to achieve their dreams from the people who don’t?

In this week’s video blog, I share the #1 SECRET to achieving any life-changing goal.

I explain how to DECIDE, once and for all, that you WILL achieve financial freedom through multifamily investing.

You’ll learn 2 different approaches to “burning the boats” and understand what it looks like when you’ve made the decision to change your life!

Watch the video below (or keep reading).

I’ve been fascinated with why some people are successful and some are not. Do you know why some people take action on their goals and some do not? 

Here’s the Secret to changing your life.

It’s simply this:

You have to DECIDE.

All you have to do is to DECIDE to that you want to change your life today—right now—there can be no other option.

You have to DECIDE that enough is enough, that it is completely unacceptable to be in the same spot this time next year.

If you ask the people who have achieved financial freedom about when and why they decided to pursue multifamily investing, the vast majority of them will tell you the exact moment they decided to act on their goal—and why.

I remember the story from one of our Coaches, Brad Tacia, when I asked him this question on podcast episode #55.

His plan at the time was to retire in 10 years by buying one rental property per year, and he was five years into his plan. 

One evening, he was putting his four-year-old daughter to bed, and she kept asking him if he had to go to work the next day.

At the time, Brad was a project manager for an auto manufacturer, working 55-plus hours per week. So, he had to tell her, “Yes, honey, I have to go to work.”

And each time, he saw her face drop in disappointment. In that very moment, he DECIDED he needed to accelerate his plan.

He took immediate action on his goal, educating himself about multifamily and making offers. Within two years he quit his job. Today he’s one of our coaches and is helping students do what he’s done. (You can read more about Brad’s story here.)

WOW. 

This is the reason why I love the Tony Robbins quote: “It is in your moments of decision that your destiny is shaped.”

And if you’re one of our mentoring students, you’ll recognize it because I send you a handcrafted sign with this quote.

(BTW, if you think mentoring might be right for you, schedule a free strategy session with us.)

So, it’s really quite simple. All you have to do is DECIDE that financial freedom is your only option.

Once you’ve truly DECIDED then the only logical next step is ACTION.

Hal Elrod would call the DECISION step “Unwavering Faith.” (Check out my video blog on the 3 lessons I learned from Hal.)

How do you truly DECIDE? 

The best way to decide is to burn the boats—either literally or figuratively.

The literal approach is to quit your job upfront. And though this sounds extreme, it works.

In my experience, the people who resign to pursue financial freedom with multifamily ALWAYS succeed because they are 100% committed to achieving their goal.

Of course, this approach is not right for everyone. And I do not suggest quitting your job without addressing your living expenses. Be sure you have at least a 6-month runway. A year would be even better.

If the literal approach feels too radical for you, then burn the boats figuratively. DECIDE that your current situation is unacceptable and that there is NO Plan B. It’s financial freedom or bust!

Whether you decide to burn the boats literally or figuratively, involve your spouse in the decision-making process and get behind your mission to achieve your goal of financial independence!

Some aspiring investors THINK they’ve decided—but then get stuck.

How do you know if you’ve truly decided?

  1. You’re taking action naturally—without really trying. Once you’ve decided that there can be no other outcome, things start falling into place. You step out on faith and the universe provides what you need to achieve your goal.
  2. You’re making the time. Because multifamily investing has become a priority, you aren’t “too busy” to make phone calls or go to meetups or analyze deals.
  3. You’re not making excuses. The days of blaming other people or your circumstances are over. You take control and take action on your goals.
  4. You’re doing whatever it takes for as long as it takes. In The Miracle Equation, Hal Elrod talks about being committed to an outcome but not necessarily a time frame. You just keep moving forward until you’re financially free.

To help you achieve your goals, I would highly recommend Hal’s book. In particular, he has a brand new way of creating affirmations that really resonated with me. Read the book, but in the meantime, check out my “Cliff’s Notes” article, “Affirmations: How to Do Them RIGHT So They Actually Work.”

So … have you DECIDED?

If so, then what are the NEXT 3 things you’re going to do?

Post your answer in our private Facebook group or to my Instagram. Let’s continue the discussion there …

To your success!

Michael

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When Do I (As a Passive Investor) Get Paid (And How Much)? https://themichaelblank.com/videos/when-do-i-as-a-passive-investor-get-paid-and-how-much/ https://themichaelblank.com/videos/when-do-i-as-a-passive-investor-get-paid-and-how-much/#comments Mon, 16 Sep 2019 12:00:20 +0000 https://www.themichaelblank.com/?p=9414 When do passive investors get paid—and how much? Read on to understand the 3 ways Limited Partners (LPs) earn money in a multifamily syndication!

The beautiful thing about passive investing in multifamily syndications is that you receive cash flow, get your principal back and make a return.

But when do you get paid and how much can you expect? 

In this week’s video blog, we go over the 3 ways passive investors get paid and WHEN to expect that money!

We look at cash flow distributions, explaining how often passive investors receive checks and what our passive investors earn at Nighthawk Equity.

You’ll understand the ins and outs of a cash out refinance and learn how passive investors can redeploy that money for infinite returns!

Watch the video below (or keep reading).

As a passive investor in a multifamily syndication, there are 3 ways you can get paid:

  • Cash flow distributions
  • Cash out refinance
  • Sale of property

Let’s go through each in turn and talk about when and how these payments can occur.

Cash Flow Distributions

When your multifamily investment property earns a profit, so do you! The frequency varies by project and operator, but most passive investors get a check monthly, quarterly, or annually.

In most cases, you will receive your cash flow distribution 30 to 45 days after the end of the period. For example, your check for March would come at the end of April.

One thing to keep in mind: Your first cash flow distribution may be delayed depending on the type of project. If you’re passive investing in a stable value-add deal, the building was earning money when you bought it. So, you will start getting distribution checks right away!

If, on the other hand, you’re investing in a heavy value-add deal, it may take 6 to 12 months to stabilize the property. In other words, your syndicator will need time to make some basic improvements and raise occupancy before the first cash flow distributions can be delivered.

(To learn more about earning cash flow distributions as a passive investor, watch my video on The Potential Returns of Multifamily Real Estate!)

Cash-on-Cash Return

A related term you need to know is cash-on-cash (CoC) return. Let’s say you made a passive investment of $100K, and you earn $7K in annual cash flow distribution. The CoC return is calculated by taking the initial investment divided by your cash flow distribution:

100K/7K = 7% CoC return

At Nighthawk Equity, we shoot for CoC returns between 7% and 9% upon stabilization of the property. And we work to hit that target no later than Year 2.

Another cool thing to remember here is that adding value to the building will grow your CoC return. As the operator renovates and increases the money coming in, your cash flow distribution checks get bigger too!

Cash-Out Refinance

Passive investors get another (much bigger) pay day in the case of a cash-out refinance. If you invest in a value-add deal and the syndicator’s team does their job, the building’s net operating income will increase over time.

Then, they can refinance the property at a higher valuation (it’s worth a lot more now that it’s earning more!). Now the operator can pay off the loan and give their passive investors a big chunk of their principal back. And hold the property to continue bringing in cash flow.

Here’s an example of how this works: We syndicated a 321-unit deal in Memphis called. Countryview. We purchased the deal for $6.8M and made $1M in capital improvements.

Now listen to this… We recently refinanced the property, and it was valued at $15M! This allowed us to return 84% of investors’ principal—and they continue owning 80% of the asset.

When you think about it, this is a pretty awesome scenario. Our passive investors got most of their initial investment back (which reduces their risk). They are now free to redeploy that money in a new multifamily syndication. But they still own equity in the original deal!

This leads to what we call infinite returns. Passive investors are still getting cash flow distribution checks based on their initial investment in Countryview. But they have a huge portion of that original investment back—and available to invest in a new deal for another similar payout!

Sale of the Property

Last but not least, passive investors get paid when a property is sold. The syndicator repays the loan first and returns your principal investment. And then, profits from the sale are split by equity.

At Nighthawk, the life of a deal is right around 5 to 7 years. In other words, we aim to return the majority of our passive investors’ capital (either through a cash-out refinance or sale of the property) within that time frame.

Show Me the Money!

So, when do passive investors get paid for putting their money in a multifamily syndication?

  • You earn regular cash flow distribution checks either monthly, quarterly, or annually
  • You get a bigger pay day after a cash-out refinance OR sale of the property

If you’re still unsure about investing in multifamily syndications, check out my special report called What’s the Better Investment: The Stock Market or Real Estate. It might open your eyes about the true returns of the stock market and the absolutely amazing opportunity we have with real estate syndications.


If you’re ready to take the next step, and you want to invest in one of our upcoming multifamily investment opportunities, please join our Nighthawk Investor Club. You’ll be asked to fill out a short questionnaire and schedule a phone call with our Nighthawk team so that we can get to know each other a bit more. We can then present you with an upcoming opportunity.

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MB 179: Take the Next Step to Financial Freedom with Multifamily – With Mauricio Ramos https://themichaelblank.com/podcasts/session179/ https://themichaelblank.com/podcasts/session179/#respond Mon, 16 Sep 2019 12:00:16 +0000 https://www.themichaelblank.com/?p=9364

Too many aspiring real estate investors never take action because they’re waiting for the right time, or they’re holding off until they know EVERYTHING about multifamily. Spoiler alert: That’s never going to happen! So, what if you simply got prepared for the next few steps and moved forward?

Mauricio Ramos is Managing Member at de Medici Group, a multifamily investment firm based in San Antonio. He specializes in acquiring underperforming assets that can be repositioned to improve the quality of life for tenants and build wealth for investors. Mauricio spent ten years as a Project Manager in the commercial construction industry before leaving to pursue real estate full-time in 2016. To date, he controls $2M in assets and has a portfolio of 234 units across Texas.

On this episode of the podcast, Mauricio joins me to discuss how his life is different now that he’s a full-time real estate investor. He describes how a desire to travel inspired him to pursue passive income and explains how he got his start in mobile homes and single-family wholesaling. Mauricio also shares the impetus behind his transition to multifamily, offering advice around raising money for syndications. Listen in for creative strategies to find off-market deals and get Mauricio’s insight on taking the first step—and THEN figuring out your next move!

Key Takeaways

How Mauricio’s life is different now

  • Time freedom (work out during day, walk dogs)
  • Travel and go to seminars like Deal Maker Live

Mauricio’s background and experience

  • Grew up in Mexico, came to US on student visa
  • 10 years as civil engineer/construction manager

What inspired Mauricio to pursue passive income

  • Quit job for 40-day backpacking trip
  • Desire for freedom to pursue travel

Mauricio’s introduction to real estate

  • Colleague introduced to single-family rentals
  • Paid cash for mobile homes, wholesaled SFH

Mauricio’s first 10-unit multifamily deal

  • Sourced through direct mail campaign in 2017
  • Sold 18 months later for 159% ROI

Why Mauricio transitioned to multifamily

  • Scalability (10 SFH vs. 10-unit)
  • Able to analyze own deals with SDA

Mauricio’s second and third multifamily deals

  • Wholesaled 8-unit for 5-figure profit
  • Wholesaled 24-unit for 2X annual W-2 income
  • Used money for mentor, passive investment

Mauricio’s transition to multifamily syndications

  • Sponsored 16- and 32-unit deals in McAllen
  • Raise money from friends, family and coworkers

Mauricio’s advice to aspiring syndicators

  • Get educated on SEC compliance
  • Provide opportunity vs. ask for money

What’s next for Mauricio

  • Expand network with seminars, partnerships
  • Goal to grow 600-unit portfolio in 2020

Mauricio’s insight on off-market opportunities

  • Lack of creativity rather than deals
  • Rach out to brokers and take first step

How to proceed without a clear plan

  • Be prepared for next 3 steps
  • Confidence in resourcefulness

Connect with Mauricio

de Medici Group

Email mauricio@demedicigroup.com

Mauricio on Instagram

Multifamily: Invest Differently on Meetup

Resources

Grant Cardone

Deal Maker Live

Rich Dad Poor Dad by Robert T. Kiyosaki

The 4-Hour Workweek by Timothy Ferriss

National Real Estate Investor Association

Driving for Dollars on the App Store

Driving for Dollars on Google Play

Syndicated Deal Analyzer

The Ultimate Guide to Buying Apartment Buildings with Private Money

Michael’s Mentorship Program

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

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

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https://themichaelblank.com/podcasts/session179/feed/ 0 Too many aspiring real estate investors never take action because they’re waiting for the right time, or they’re holding off until they know EVERYTHING about multifamily. Today, Mauricio Ramos joins me to share his take-the-next-step approach to entrep... Too many aspiring real estate investors never take action because they’re waiting for the right time, or they’re holding off until they know EVERYTHING about multifamily. Today, Mauricio Ramos joins me to share his take-the-next-step approach to entrepreneurship and explain how he quit his job in construction management with apartment building investing! Michael Blank: Commercial Real Estate Investor | Entrepreneur clean 36:09
MB 178: 10X Your Multifamily Income with an Extended-Stay STR Model – With Al Williamson https://themichaelblank.com/podcasts/session178/ https://themichaelblank.com/podcasts/session178/#respond Mon, 09 Sep 2019 13:05:21 +0000 https://www.themichaelblank.com/?p=9361

Real estate investors are cautious when it comes to implementing a short-term rental (STR) strategy because of the regulatory uncertainty in the space and the extra expense of hotel taxes. But what if we could enjoy the benefits of an Airbnb model WITHOUT the uncertainty or the extra expense? Al Williamson leverages an extended-stay strategy targeted at business travelers to 10X his net income on a small multifamily property.

Al is a full-time real estate investor and Managing Partner of Easy Corporate Housing, an extended-stay STR housing solution for business travelers in Sacramento, California. He also serves as a speaker, author and mentor for investors through Leading Landlord, a platform designed to help landlords increase their income and equity. Al has developed creative strategies for growing NOI as much as 10X above a conventional landlord operation, and he shares those tactics in his books, Building Wealth with Inner City Rentalsand 40 Ways to Increase the Net Income of Your Rental Property.

Today, Al joins me to explain how he quit his job as a civil engineer with the cashflow from an 8-unit property in an inner-city neighborhood. He describes how he went about fixing the neighborhood and discusses what inspired him to experiment with a short-term rental strategy. Al also shares how to determine your target market and walks us through the six types of extended stay customers. Listen in for insight around the benefits of offering 30-day stays and learn how to identify an ideal property for the extended-stay STR model! 

Key Takeaways

How Al quit his job with an 8-unit class D property

  • Reposition inner city neighborhood
  • Leverage pay-day rent schedule
  • Rent bicycles, coordinate internet

How Al got started investing in real estate

  • Started with house hack (3-unit building)
  • Maintenance costs eating up cashflow

Why Al purchased the 8-unit class D property

  • Value of 3-unit quadrupled, ‘let’s do it again’
  • Remove blight (gangs, guns and prostitution)

How Al went about fixing the neighborhood

  • Exercise leadership + create sense of community
  • Easy as calling in broken streetlights, parties
  • Offer cash for keys as necessary

What inspired Al to try a short-term rental strategy

  • Travel for work himself, hated hotels
  • Net income = 8 to 10X traditional model

How Al implemented a short-term rental strategy

  • Set aside single unit for business travelers
  • Realized benefits of one-month threshold

The best areas for an extended-stay, STR strategy

  • Near Extended Stay America, Residence Inn
  • Use Airbnb as backup plan

Al’s advice for determining your target market

  • List on Airbnb and see who comes
  • Build relationships with local businesses

The top 6 types of extended-stay customers

  1. Vacation travelers
  2. Medical
  3. Military
  4. Student housing
  5. Insurance
  6. Temporary

Why Al only needs a few units to be successful

  • Huge income per unit ($1800/month)
  • Single unit covers cost of mortgage

The ideal property for an extended-stay STR

  • Margin far above market rent
  • Furnish according to target guest

Connect with Al

Extended Stay Landlord

Leading Landlord

Al on BiggerPockets

Al on LinkedIn

Resources

Mr. Landlord

Building Wealth with Inner City Rentals: Success the Catalytic Landlord Way by Al Williamson

40 Ways to Increase the Net Income of Your Rental Property by Al Williamson

Tim Hubbard on ABI EP111

Michael’s Mentorship Program

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Apartment Investor Network Facebook Group

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

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https://themichaelblank.com/podcasts/session178/feed/ 0 Real estate investors tend to be cautious about implementing a short-term rental strategy. But what if we could enjoy the benefits of an Airbnb model WITHOUT the regulatory uncertainty or the extra expense? Today, Real estate investors tend to be cautious about implementing a short-term rental strategy. But what if we could enjoy the benefits of an Airbnb model WITHOUT the regulatory uncertainty or the extra expense? Today, Al Williamson joins me to discuss the extended-stay STR model he used to quit his job with an 8-unit multifamily property! Michael Blank: Commercial Real Estate Investor | Entrepreneur clean 32:41
How to Stand Out from Other Syndicators (So That You Raise More Money) https://themichaelblank.com/videos/how-to-stand-out-from-other-syndicators-so-that-you-raise-more-money/ https://themichaelblank.com/videos/how-to-stand-out-from-other-syndicators-so-that-you-raise-more-money/#respond Mon, 09 Sep 2019 13:00:52 +0000 https://www.themichaelblank.com/?p=9374 What makes YOU different from all the other multifamily syndicators? Read on for 3 tips to stand out from the crowd—so you can raise more money!

As more and more syndicators and capital raisers enter the multifamily space, it becomes more and more important for you to differentiate yourself.

So, why should a passive investor trust YOU with their money?

The key here is to stand out among your peers. But how?

In this week’s video blog, I share 3 tips for standing out from the crowd—so that you can raise more money!

I explain how to develop your syndicator brand story, identifying your secret sauce and the specific audience you want to serve.

You’ll understand how to build a platform that attracts leads and keeps your investors engaged for the long term!

Watch the video below (or keep reading).

Tip # 1: Develop Your Brand 

Developing your personal brand requires a certain degree of self-awareness. I recommend devoting a day to developing your answers to the following questions:

  1. What’s your story?
  2. What’s different about you? What’s your secret sauce?
  3. Who do you want to attract? Who do you want to repel?
  4. Who are you going to serve?
  5. How are you going to serve them?
  6. What is your mission?

Then, put the answers to those questions together as a syndicator brand statement. Let me walk you through the process with my own responses to the prompts.

1.What’s your story? 

I was working full-time when I read Rich Dad Poor Dad, and it changed my life. I became the crash test dummy of financial freedom, pursuing restaurants, software startups, trading stocks and options, wholesaling and SFH flips—and ultimately lost all my money. I finally figured it out with syndicating apartment buildings and decided to teach others to become financially free.

2. What’s different about you? What’s your secret sauce?

My focus is on helping people achieve financial freedom so that, ultimately, we are empowered to live lives of significance.

3. Who do you want to attract? Who do you want to repel?

I attract people who want financial freedom but repel people who just want to be rich.

4. Who are you going to serve?

As a syndicator, I serve anyone who is considering real estate as a way out of the grind. This includes both aspiring active and passive investors.

5. How are you going to serve them?

For active investors, I offer the highest quality free content and programs available. My platform is designed to inspire, and it really works! I provide a blueprint to becoming financially free in one to three years.

For the passive investors, I offer a consistent flow of high-quality syndication deals that generate passive income and long-term wealth through the investing arm of my organization, Nighthawk Equity.

6. What is your mission?

I am dedicated to helping people become financially free with real estate, empowering them to live a life of significance.

So, how do I put all of that together as a cohesive brand statement?

My mission is to help people become financially free with real estate. For active investors, we provide high-quality content and programs that inspire them to take action and provide the blueprint to quitting their jobs in the next 1-3 years. For passive investors, we provide a consistent flow of high-quality investment opportunities that provide passive income and long-term wealth. We do all of this to empower people to live a life of significance.

You’ll be sharing your brand story with potential investors time and time again, so be sure you know who you are and what you stand for as a syndicator. People can smell dishonesty, so don’t copy someone else. Be authentic, and you will find the right audience. An audience that knows, likes and trusts YOU.

Step# 2: Bang the Drums

Once you develop your own unique brand, the next step is to “bang the drums.” Like Dan Handford at Deal Maker Live, you have to capture attention and generate leads. (Check out the video that accompanies this post for to find out how Dan illustrated this step!)

Build a platform to gain visibility as a syndicator and get the word out about your business. The most obvious way to do this is to create a website. But what else can you do?

Generate buzz around your brand by:

  • Being a guest on multifamily podcasts
  • Building an email list with free content (e.g.: eBook or report)
  • Writing informative blog posts
  • Generting educational videos

The goal here is to serve your audience—and that will attract more people to your brand as a syndicator.

Tip # 3: Keep Your Investors Engaged

Once you’ve attracted the people you want to serve, it’s important to keep those potential investors engaged with consistent deal flow. You may need to align with a few other high-quality operators so that you can offer your audience multifamily opportunities on a regular basis. 

Other ways to keep investors engaged include frequent emails, calls, webinars and property tours. Stay in front of your investors and become their go-to syndicator.

Final Thoughts

To stand out among the crowd of syndicators and capital raisers in the multifamily space, it’s crucial to…

  1. Develop your brand
  2. Bang the drums
  3. Keep your investors engaged

In Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy Social World, Gary Vaynerchuk describes this process: Provide value over and over and over—and then ask your audience to invest their money in a deal you’re syndicating!

Interested in learning more about how to raise money for your first multifamily deal? Download our free eBook, The Secret to Raising Money to Buy Your First Apartment Building. 

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How Multifamily Deals Are Structured https://themichaelblank.com/passive-investing/how-multifamily-deals-are-structured/ https://themichaelblank.com/passive-investing/how-multifamily-deals-are-structured/#respond Mon, 09 Sep 2019 13:00:52 +0000 https://www.themichaelblank.com/?p=9370 How are multifamily deals structured? Read on for insight around equity splits, voting rights, return of principal and sponsor fees!

Potential investors have lots of questions about how multifamily deals are structured, and rightfully so.

If you’re trusting us with your hard-earned money, it’s only fair that you understand your rights as a limited partner, the fees you may be asked to pay, and the timeline around getting your money back.

In this week’s video blog, I cover the 6 main components of the structure of a multifamily deal:

  • The Entity
  • Equity Splits
  • Preferred Returns
  • Control and Voting Rights
  • Return of Principal
  • Sponsor Fees

Watch the video below (or keep reading).

Accredited Investors

Based on SEC regulations, an accredited investor is someone whose annual income has exceeded $200K (or $300K with a spouse) for each of the last two years OR who has a net worth of $1M-plus, either alone or with a spouse and NOT including the equity in their primary residence.

Because accredited investors are high-net-worth individuals (HNWI), the SEC allows them to invest in deals without knowing the sponsor in advance. The thinking is, if they lose the money they put in real estate deal, they won’t lose their livelihood.

Sophisticated Investors

If you don’t meet the SEC requirements for an accredited investor, you can still invest in multifamily syndications, so long as you are a sophisticated investor. This means you have previous experience investing outside the stock market and/or education in alternative investments.

It is important that non-accredited investors have a previous relationship with the sponsor before investing in a real estate deal. For example, if you register with us at Nighthawk Equity, we will get to know you via an investor questionnaire and a live call as well as potential trainings or property tours BEFORE we present you with a live deal. (Accredited investors can be offered deals right away.)

SEC Exemptions

Regulation D of the Securities Act allows sponsors to offer real estate deals without having to register with the SEC, as long as we follow certain guidelines. The two exemptions are the 506(b) and the 506(c), with the 506(b) being most common for multifamily syndications.

  • The 506(b) allows us to take money from accredited investors AND up to 35 non-accredited investors who are known to us and qualify as sophisticated investors. Under 506(b), we cannot advertise the offering.
  • The 506(c) allows us to take money from accredited investors only. Under 506(c) guidelines, we CAN market the deal to HNWI. For example, a sponsor might buy a list of doctors and invite them to a luncheon in order to pitch a syndication deal.

Minimum Investment

So, how much do limited partners (LPs) typically invest in a deal? The minimum investment varies by operator and the deal itself, but generally lies somewhere between $50K and $100K. For larger deals, the minimum may be closer to $100K due to the limitations of the 506(b) exemption.

How do you decide how much YOU should invest? I would caution against investing all of your money in a single deal unless you’ve invested with the operator before and feel very comfortable with them.

A good rule of thumb is to do the minimum investment and see how things go. What are the cashflow distributions? How well does the operator execute on their business plan? Do they communicate with you regularly?

Spread your investments out over several deals in the beginning. Then, once you’ve found one or two operators you can trust, go deep.

Final Thoughts

Whether you’re an accredited or sophisticated investor, you can take advantage of the opportunity to invest in multifamily syndications:

  • Accredited investors are eligible for 506(b) AND 506(c) offerings, and they don’t necessarily need to have a previous relationship with the operator.
  • Non-accredited/sophisticated investors are eligible for 506(b) offerings, and they must establish a relationship with the sponsor prior to investing in a deal.

How much you invest is up to you, but minimums are usually in the $50K to $100K range, and it’s best to spread your money out over several deals until you find a strong operator or two to work with long-term.

Want to qualify as a sophisticated investor? Begin your education in alternative investments by downloading our Special Report: What’s the Best Investment? Stocks or Real Estate to learn more!


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MB 177: Tech Tools for Data-Driven Multifamily Investing – With Raj Tekchandani https://themichaelblank.com/apartments/session177/ https://themichaelblank.com/apartments/session177/#comments Wed, 04 Sep 2019 13:00:35 +0000 http://www.themichaelblank.com/?p=9318

Advancements in technology allow us to access and analyze an incredible amount of data. But what does this mean for multifamily investors? Can we make use of tech tools to find off-market deals, for example? What if we could automate the underwriting process? How might machine learning facilitate market analysis?

Raj Tekchandani is the Founder and Managing Principal at Smart Capital Management, a real estate investment firm that focuses on the acquisition and management of value-add multifamily properties. Raj brings his significant experience in tech startups to his work as a full-time investor, leveraging data analytics, machine learning and artificial intelligence to identify strategic assets in emerging markets that provide high-yield returns.

Today, Raj joins me to explain how he got started in real estate, buying condos in Orlando to supplement his uncertain W-2 income. He discusses what inspired his transition to multifamily and shares his diverse experience as an active investor, passive investor, and capital raiser for syndication deals. Listen in for Raj’s assessment of the available tech tools for real estate and learn how he quit his job in startups to become a data-driven multifamily investor! 

Key Takeaways

What inspired Raj’s interest in real estate

  • Uncertainty of work in tech startups
  • Create second income stream

How Raj got started in real estate

  • Friend buying condos in Orlando (2012)
  • Purchased 9 of own for cashflow

Raj’s transition to multifamily

  • Reading about economies of scale
  • Decision to get more involved

Raj’s first multifamily investment

  • 15-unit in up-and-coming neighborhood nearby
  • Unexpected expenses, fired property manager

How Raj got into passive investing in multifamily

  • Continuing education in syndications
  • LP for 151-unit in Georgia

Why Raj decided to quit his job and do real estate full-time

  • Control own destiny, control own time
  • Bring passion for data analytics to real estate

What Raj is working on now

  • Partner with syndicator as capital raiser
  • ‘Full-time evangelist for multifamily’

The tech tools for real estate Raj is exploring

  • Reonomy for apartment ownership data
  • Enodo for underwriting multifamily deals
  • Building market analysis tools with Bay Area company

How Raj educates new real estate investors

  • Build trust through meetups and content
  • Walk through recent transaction
  • Serve as concierge through first deal

What Raj looks for in a multifamily operator

  • Trusted partners from mastermind network
  • Responsive to communication

Connect with Raj

Smart Capital Management

Email raj@smartcapitalmgmt.com

Data Driven Multifamily Investing Facebook Group

Resources

What’s the Best Investment: The Stock Market or Real Estate?

Syndicated Deal Analyzer

Meetup

Reonomy

Enodo

Nighthawk Equity

Podcast Show Notes

Review the Podcast on iTunes

Michael’s Website

Michael on Facebook

Michael on Instagram

Apartment Investor Network Facebook Group

Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank

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https://themichaelblank.com/apartments/session177/feed/ 1 Advancements in technology allow us to access and analyze an incredible amount of data. But what does this mean for multifamily investors? Today, Raj Tekchandani joins me to discuss the AI and machine learning tools geared toward real estate and explai... Advancements in technology allow us to access and analyze an incredible amount of data. But what does this mean for multifamily investors? Today, Raj Tekchandani joins me to discuss the AI and machine learning tools geared toward real estate and explain how he quit his job in tech startups to become a data-driven, full-time investor! Michael Blank: Commercial Real Estate Investor | Entrepreneur clean 30:25
How to Find Off-Market Deals https://themichaelblank.com/videos/how-to-find-off-market-deals/ https://themichaelblank.com/videos/how-to-find-off-market-deals/#respond Wed, 04 Sep 2019 13:00:34 +0000 https://www.themichaelblank.com/?p=9351 Struggling to find good multifamily deals? Read on for 9 tips to build relationships with brokers and land off-market real estate deals!

If you’re looking to do your first multifamily deal, it may feel like you’re stuck in a Catch 22. You need access to good off-market deals. But brokers won’t take you seriously without a track record.

What can you do to make connections with brokers and build their trust—even if this is your first experience with multifamily investing?

In this week’s video blog, I share 9 tips for landing off-market real estate deals!

I explain how to get facetime with brokers and provide value, solving problems for them and offering feedback on deals.

You’ll understand how to build credibility by getting educated, assuring brokers they’ll get paid, and partnering with an experienced team.

Watch the video below (or keep reading).

Tip #1: Don’t Sound Like a Newbie

When you meet with brokers, it’s important to know what you’re talking about so they take you seriously. The fastest way to do that is to educate yourself in the realm of multifamily and build an experienced team.

I won’t go into detail about building a team here, but you can learn more by checking out my video blog, How to Build Your Commercial Real Estate Team and Get Your First Deal. On the education front, explore the resources on my YouTube channel, listen to The Apartment Building Investing Podcast, and invest in The Ultimate Guide to Buying Apartment Buildings with Private Money, an online course that walks you through the process of doing your first multifamily deal.

Tip #2: Solve Problems for Brokers

Don’t approach brokers expecting to get something for nothing. If you want them to email YOU when they come across an off-market deal, you’ve got to provide value.

To build strong relationships with brokers, ask them what they need. They’re looking for a good inspector? Connect them with one! You’ve found a useful market report? Share it! Give, and you will receive off-market deals.

Tip #3: Provide Timely Feedback on Deals

Another way to show brokers that you are a professional is to give them feedback on marketing packages within 24 hours of receiving the off-market deal. If you like the numbers, make an offer. If not, explain why.

This kind of responsiveness sets you apart from the vast majority of real estate syndicators. The next question is, how do you analyze a deal that fast? Use the most popular apartment building analysis tool on the planet, the Syndicated Deal Analyzer, to evaluate a deal in minutes.

Tip #4: Assure the Broker They’ll Get Paid

Brokers want to know they’re going to get their cash money when they put a deal under contract. Reassure them by demonstrating that you’re serious, you’re educated, and you’ve got a strong team and investors behind you.

For a little extra incentive, consider paying the broker an additional 1% fee. As Robert Kiyosaki says, you have to BE before you can HAVE, so try BEING generous first and see if it leads to off-market deals!

Tip #5: Network Like Crazy

Take brokers to lunch, drinks, or sporting events. Spending time with people is the only way to build the kind of relationship that leads to off-market deals.

Michael Becker has a whopping 6K multifamily units, and he attributes his success to constant networking. (Listen to my conversation with him on the podcast and learn more about the right way to work with brokers!)

Tip #6: Hop on a Plane BEFORE You Have a Deal Under Contract

Conventional wisdom tells us to wait until we have a deal under contract before we spend our money on airline tickets. But I’ve observed that the syndicators who break this rule build relationships with brokers more quickly—and that leads to off-market deals.

To be clear, I’m not recommending that you go in blind. Do the up front work first, and plan your trip in advance. Spend one or two days in the market. Schedule meetups with multiple brokers. Spend time with your property manager. Tour several properties. This face-to-face contact accelerates the relationship-building process. And that translates to off-market deals.

Tip #7: Do What You Say

You can tell a lot about a person’s character based on their follow-through. Brokers want to do business with sponsors they can count on, so if you say you’re going to do something—DO IT.

If you promise to send an email by 5pm on Friday, send the email by 5pm on Friday. It seems obvious, but you’d be surprised how much you can differentiate yourself by being a man or woman of your word. 

Tip #8: Be Persistent and Consistent

Brokers are busy, and they aren’t always going to return your calls or emails. It’s your job to stay in contact with them on a regular basis.

Check in and see what off-market deals they have. Provide value. Come up with reasons to stay in touch. Brokers won’t know you’re serious unless you show it by connecting with them consistently.

Tip #9: Partner with a Senior Operator

If this is your first rodeo, it’s smart to partner with a more experienced operator. A joint venture of this kind is a shortcut to credibility, and it puts you in a much stronger position with brokers. The kind of position that leads to off-market deals.

At Nighthawk Equity, the investing arm of the Michael Blank organization, we partner with aspiring syndicators on their first multifamily deals. To date, we have helped new sponsors close nine deals for a total of 1,100 units across the US through our Deal Maker’s Mastermind.

Final Thoughts

The secret to finding good off-market deals is getting to know a few good brokers.

Make connections by…

  • Networking like crazy
  • Hopping on a plane BEFORE you have a deal under contract

Build trust by…

  • NOT sounding like a newbie
  • Assuring them they’ll get paid
  • Doing what you say
  • Being persistent and consistent
  • Partnering with a senior operator

And provide value by…

  • Solving problems for brokers
  • Providing feedback on deals

Build strong relationships with brokers, and you’ll be on the receiving end of quality multifamily off-market deals!

Looking for a senior operator to help build your credibility? Join our Elite Investors Club!

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