By: Brandon Turner
This book is a crash course in how to invest in small multifamily real estate.
The author differentiated small and large multifamily real estate by number of units but also by the method in which they are acquired and operated.
|Small Multifamily Real Estate||Large Multifamily Real Estate|
|Typically 2-20 Units||Typically 80+ units|
|No on-site staff||On-site staff|
|Likely financed by a local bank||Likely financed by large commercial lenders with assistance of mortgage brokers|
|Down payment probably self-funded||Down payment probably funded by raising money from investors|
|Typically managed by owner or small local property manager||Typically managed by large, third-party property manager|
|Usually local||Usually long-distance|
|Owner likely knows tenants’ names||Owner unlikely to know tenants’ names|
|Repair work to units done by owner or handymen hired by owner||Repair work to units done by contractors or on-site employees|
|Property rehabs performed by owner or local contractors who handle small-scale projects||Property rehabs performed by contractors who handle large-scale projects|
|Bank’s decision on whether to fund typically based on owner’s borrowing strength||Bank’s decision on whether to fund typically based on property’s business strength|
|Owner usually involved in daily operation of investment||Owner usually not involved in daily operation of investment|
Topics they addressed were:
- Property Types
- Choosing your location
- Property conditions
- Price ranges
- Profitability and Analysis
- Strategy for finding deals
- Finding deals on-market
- Finding deals off-market
- Walking a property
- Traditional financing
- Creative financing
- Making quality offers
- Due Diligence
- Managing the property
- Accounting, Taxes, and Legal Entities
My favorite Chapter: Chapter 12: Finding Small Multifamily Deals Off-Market
- Strategy 1: Drive for Deals
- Strategy 2: Direct-Mail Marketing
- Strategy 3: Networking with Landlords*
- Strategy 4: Working with Property Managers
- Strategy 5: Working with Local Wholesalers
- Strategy 6: Online Marketplaces
Many owners have “headache” properties that they would be willing to sell, even though they haven’t decided to do so yet. When you connect with them before they list their properties officially, you can land some terrific deals.
Just because you find a property off-market doesn’t necessarily mean it’s a great deal. You’ll need to do the math to find out whether it’s the right property for you.
Decide on a strategy. Commit to it. Treat it like a business. Develop systems, track, trend, adjust. You will find deals, if you work at it.