Three Things That Took Me From Small Deals to 850 Multifamily Units

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0:00 We are under contract for another 200
0:03 rentals. I'm going to walk this property
0:04 while I'm going to explain to [music]
0:05 you the three things that you need to do
0:07 to be able to scale to properties like
0:09 this in less than 5 years in your
0:11 investing career. Exactly what I did is
0:13 exactly what you can do. Uh, by the way,
0:15 this will put me at about 850 units when
0:17 we close and we're under contract for
0:19 three other deals in Texas. How do we do
0:21 this? Well, it all starts at the
0:22 beginning. You need to become the most
0:23 obvious buyer for any property. There's
0:26 a few different skills that you need to
0:27 pick up to do this, but the first thing
0:28 you have to do is kind of obvious. The
0:29 other two I will share on this video as
0:30 well, but the first [music] one you need
0:32 to buy the first darn deal. It will
0:33 probably be the hardest. Here's what I
0:35 would skip. Single family, duplex,
0:37 triplex, forplex. Do not do the
0:38 residential. I started there. It was a
0:40 waste of time. Did it cash flow a little
0:42 bit? Yeah, kind of. But 8 years of
0:44 buying those, I got a mighty 2 grand a
0:46 month of cash flow. Paid for my tiny
0:48 mortgage and my tiny house in a place I
0:50 didn't want to live. That's about as far
0:51 as that goes. So, you're following
0:53 Bigger Pockets or whatever the whatever
0:55 your favorite source is. A lot of them
0:56 will talk about the house hack, but so
0:57 many people talk about the house hack
0:58 being the way to financial freedom
0:59 [music] or single family investment. And
1:01 the reason they do it is because it's
1:03 cheap. It's easier to wrap your head
1:04 around a smaller [music] purchase price.
1:06 What they don't teach you is that a
1:08 bigger deal that makes more money is
1:09 going to be easier to align more capital
1:11 to. Your goal is not to buy the cheapest
1:13 thing you can in any investment. It's to
1:16 buy the best thing you can in the best
1:17 area you can. I'm in Long View, Texas.
1:19 [music] This may not be the best area of
1:21 all time, but it's a awesome little subm
1:23 market out here in East Texas. This 200
1:26 unit is available because the current
1:27 operations of this property are not
1:29 allowing them to lease up. Now, all
1:30 their neighbors are at high occupancy,
1:32 [music] but their management structure
1:33 has some leasing issues that we are
1:35 uniquely equipped to solve. How did we
1:37 become the most obvious buyer for this
1:39 property? Well, in Stevenville, Texas,
1:40 about 180 units. A lot of them had
1:42 leasing problems. We fixed it. That's a
1:44 tertiary market. Abalene, Texas, out in
1:46 West Texas, we own 244 units under
1:50 contract for another 80. Some of those
1:52 buildings had leasing problems. We fixed
1:53 all the leasing problems. We specialize
1:55 in doing lease up in large multif family
1:58 properties [music] in tertiary markets.
1:59 So when there's problems at large
2:01 properties in tertiary markets, guess
2:03 who the first call is? Me. That all
2:05 started with the first deal. There's a
2:07 38x on market. No one wanted it. And so
2:10 we came in and we did the project. It
2:12 was on market for $2 million seller
2:13 financable. They wanted 15% down. I
2:15 didn't have the $300,000, but what I did
2:17 have was the deal, which is thing number
2:20 two. You [music] don't need to find the
2:21 money first. You don't need to find the
2:23 debt first. Everyone focuses on where's
2:25 the cash coming in? My question, the
2:27 cash for what? If you have no
2:29 opportunity, you will raise no capital.
2:31 That is a hard and fast rule. There is
2:33 no way to raise money for a deal that
2:35 does not exist. Your mission in buying
2:37 the first deal, believe it or not, is
2:39 actually finding the first deal. It is
2:42 not finding the money for the first
2:43 deal. It is not earning the money for
2:44 the deal. Here's the secret that no one
2:45 taught me when I was trying to escape
2:47 the 9 to5. Every deal is purchased with
2:49 cash. Every single [music] deal is 100%
2:51 purchased with cash. Now, it could be
2:52 your cash, it could be someone else's
2:53 cash, it could be the seller's cash, it
2:54 could be the bank's cash. No matter how
2:56 you're structuring it. Every deal is
2:57 transacted with cash. And the money is
2:59 always made up. You need to make up the
3:01 money to the deal you have. You have
3:02 high cash flow. You're going to do it
3:04 likely as debt. If you have a bunch of
3:05 upside, you're going to bring on some
3:07 equity partners who want a piece of that
3:08 upside with you. [music] But you do
3:10 these deals to build your resume like
3:13 you would any other job so you become
3:15 the most obvious buyer for apartments
3:17 like what's [music] right behind me.
3:18 Step three is the one that gets
3:19 everyone. You actually have to have a
3:21 very specific why on why you're doing
3:22 everything if you just want to go make
3:24 more money and buy more apartments. Uh I
3:26 see a lot of those guys. They come up
3:27 all the time on the internet. I see them
3:29 losing their apartments several years
3:30 later all the time. And I see this again
3:32 and again and again. More money, more
3:34 scale. Not a good motivator. I wanted to
3:36 retire my wife. Wanted to build our
3:38 dream house. Want to provide for my
3:39 kiddos. [music] And I wanted to leave
3:41 Washington state. So for me to leave my
3:42 job, for her to leave her job, for I to
3:44 make this my career. Another thing you
3:46 have to be able to do, and this is
3:47 non-negotiable, you just need to be able
3:48 to do some basic math. Cash flow is not
3:50 hard to calculate. Building values are
3:53 not hard to calculate. This is algebra
3:55 one. Spend a little bit of time getting
3:57 a community that underwrites deals or
3:59 learn how to do them and practice them
4:00 weekly until you get good at this. If
4:02 you know how to underwrite a deal and
4:04 you transact a few times, you will get
4:06 extremely good at doing numbers. If you
4:09 understand how real estate works, you'll
4:11 understand why you buy this. Now, yes,
4:13 this thing is going to be a cash flow
4:15 monster. And yes, it cash flows day one.
4:17 Every deal has to. But the upside on
4:19 this, we're buying this for a little
4:20 under $13 million, which may sound like
4:23 a loss, but for 200 units stabilized,
4:26 this is worth 17 to $19 million,
4:29 depending on market conditions on exit.
4:31 There is a ton of upside, millions and
4:33 millions of dollars to be made. What is
4:34 the actual job? Basic maintenance and
4:37 leasing. One thing that motivated me to
4:38 get into bigger apartments instead of
4:40 buy the small stuff. Think about the
4:41 amount of work that goes into this. This
4:42 will be a big project. is going to be a
4:44 hard project, but we will make millions
4:45 of dollars doing it. Think how long it
4:47 takes for an average person in their 9
4:49 to5 to save up for millions of dollars.
4:52 Then look at the actual hours that we'll
4:53 work here. This is going to be a hard
4:55 job. I am going to put in a lot of hours
4:57 of work. I'll be compensated depending
4:59 on where you're at, like 10 to 50 times
5:01 what an average person [music] makes
5:03 depending on what your job is and where
5:04 you're at in the country. Uh, I will
5:06 make a lot more than some people make in
5:07 their entire combined [music] careers
5:10 working a really hard couple years at
5:12 this project. Better yet, this project
5:14 will likely be done by the end of
5:16 [music] the 12-month cycle. All we have
5:18 to do is fix up a few decks, fix up its
5:20 few interiors, and do lease [music] up.
5:22 Now, that's a lot harder than it sounds
5:24 on YouTube, but it's not that hard for
5:27 the amount of money we make. Scale is
5:29 really important in real estate. Don't
5:30 focus on unit count. Focus on dollars.
5:33 Bringing property from 13 million to 17
5:35 million and say we [music] hit the low
5:37 end is a lot of money for a lot of
5:39 people. That is a good enough goal to
5:41 get you going. But you have to do the
5:43 first deal. You have to understand the
5:45 numbers and you have to find the
5:47 opportunity before you find the cash. If
5:49 you can put all those things together,
5:51 you're going to do just fine.