How do you actually get started in multifamily? There's so many ideas of how you break into
this market, but how do you do it step by step? In this video, I'm going to walk you
through my 5 favorite strategies of breaking into the multi-family market
even if you've never purchased multi-family before.
I'm going to talk to you about the thing that sabotages most investors from ever
getting started. I'm also going to walk you through what kind of property should you start off with
right from the get-go, and then I'm going to help you pick a market. What market should you go to?
I don't know if you've noticed but the globe is a big place. Where do you start when you're
investing in multi-family real estate? Let's get started. The first strategy when you're busting
into multi-family real estate is you've got to shift and expand that mindset. And I know this
sounds trite. Everybody wants to talk about mindset and talk about how your mind is going to change
your reality but let me tell you, I used to be what I call a tactic junkie. Meaning every event
I go to, I didn't want to hear about mindset. I just wanted people to tell me what to do and I would go
implement it. And I will say this, I was a master implementer, meaning you told me to do something,
I would go do it. But what I quickly realized was other people weren't implementing as much as I was,
but they were seeing greater results. So, I started asking myself, "If we're doing the same thing,
and yet they're seeing greater results, why is that?" You know what I realized, it's because their
mindset was fueling the tactics, not just their intellect. One of the biggest shifts in a mindset
to shift to multi-family is we need to start thinking bigger. You're not thinking about 1
door, you're thinking about 5, 10, 15, maybe 50 doors. You're not talking about 1 tenant,
you're talking about 5, 10, maybe 50 tenants. You're not talking about a thousand dollars a
month, you might be talking about 50 thousand dollars a month. So not only do we wanna expand and
make that mindset bigger, but I want you to stop thinking transactionally about real estate and
start thinking passively. Transactionally means "I only make money when a transaction happens."
When I'm wholesaling a property, I only make money. When I find a buyer, I find a seller and I make the
connection. If I'm fixing and flipping properties, I only make money when that property sells
and I get my money at the end. I want you to stop thinking transactionally, start thinking passively.
Passively means this. Every single month, whether you're at that property or not, you generate
revenue. Revenue comes in every single month. That's a big mindset shift to stop chasing the payday and
start chasing the pay year. The 2nd tip is to make sure you pick a mentor. Mentorship is the
thing that has changed my life more than anything. Quick story for you, I was listening to Michael
Jordan speak one time and Michael Jordan used to talk about how he needed a coach. Now, I don't
know if you know anything about basketball, but Michael Jordan's coach was Phil Jackson, probably
one of the greatest coaches of all time. He had 11 championships in his career, this is a very,
very good coach. Well, Michael talked one day about saying, "You know, when I'm dribbling down the court,
Phil can see things I can't see. He can tell me, "Hey Michael, when you dribble right, you first step left.
You're tipping the defense off to where you're going." Now, Michael Jordan said, "Do you think I could
beat Phil Jackson one-on-one?" Yeah, Phil was like 60 at the time. I'm guessing the greatest basketball
player possibly of all time could have taken him one-on-one but he said, "But it's not about
that. I need a coach to see what I cannot see." Now, here's the greatest athlete possibly of all time,
certainly one of the greatest basketball players of all time saying, "I need a coach." When I heard
that, I'm saying, "Well, if Michael Jordan needs a coach, Mike Fritz probably needs a coach." And I'm
telling you, picking a mentor and choosing a coach is one of the most important things you can do
for your real estate business and your life. We talk about changing mindset, well one of the powerful
ways to do that is to pick a mentor that can truly help you walk through the process. And when picking
a mentor, I want you to think about an execution coach. What that means is picking a coach that
actually knows what to do. When you can't find deals, what do you do? When you're trying to raise
private capital and you can't find it and you've run out of your investor list, what do you do? A coach
will help you work through that and that's why I want to see you pick a mentor. If you're going to
shift that mindset, you got to make sure you have a mentor that can guide you through the process.
Now, the 3rd strategy for getting started in multi-family real estate is you've got to pick the
right market. Now, you can fix and flip in pretty much any market. You just have to buy lower than
you sell for. Pretty easy, right? You can wholesale in any market. You buy a project, find somebody who
wants to buy it, pretty easy. But when you're buying multi-family real estate, the market is incredibly
important because you are banking on that property increasing in value by raising the rents. Well, if
you're in a market where you can't do that, you're not going to see the value upswing you thought
at the beginning. Picking a market is of utmost important when you're buying multi-family real
estate. You want to first pick a market that's in a growth pattern. Make sure that the population is
growing and that jobs are growing in that market. If you see a market that's on a continual decline,
stay away. You're not going to see the value increase in your property. You want to stay
away from metro cities, especially right now. We're filming this in the middle of the Covid-19 pandemic
and so many people in large metropolitan areas, we're seeing a mass exodus from those markets into
more cost-effective markets in which people can afford to live. And the last one, make sure you pick
a market that is landlord-friendly. There are some markets that are very tenant-friendly and it makes
it very hard for you to manage your property well. There are other markets that are landlord-friendly
and it makes it easier if you have a tenant that isn't keeping up their end of the bargain
and paying rent, you can remove that tenant and get a new tenant in there. If you're in a tenant-
friendly state, sometimes that tenant can stay there for 4 months, 6 months, 8 months,
more than a year without paying rent before you're able to remove them and move on and get somebody
that will keep up their end of the bargain. Picking a market is really important when busting in
to multi-family real estate. Now, before I get to my last 2 strategies, if you know somebody who
wants to bust into the multi-family real estate market, make sure you share this video with them
and let them know anybody can do it. The 4th tip for getting into multi-family real estate is
stick with 10 units and under to begin. I know a lot of gurus are saying, "Go big or go home,"
but let me tell you, if you go too big before you're ready, you'll lose your home. And I want
to make sure that you continue to do it well, do it right and build it sustainably so you can see the
wealth multi-family offers. The other thing working with a little bit smaller projects due to start,
it gives you the ability to build your team and to just build the muscles of collecting rent, filling
units, repairing units, working with contractors, working with property managers, with lenders,
understanding the market in which you're investing in even further. Starting with 10 units and under
allow you to grow with your portfolio rather than buying a portfolio that's ahead of your skillset.
I want to make sure you get into multi-family real estate and build it sustainably. And my
last strategy, maybe the most important, is to learn the underwriting process. The underwriting process
is taking the income and the expenses and figuring out what your return on investment's gonna be.
Especially if you're gonna partner with investors, they want to know what their return is going to be
and you're the one that's going to underwrite that property and make sure they know it's a
worthy investment to move forward with. But when underwriting, you want to make sure you underwrite
like a pessimist. Yes, you heard me say that right. Underwriting like a pessimist means you're making
sure you're thinking worst case scenario. The goal here isn't to make your mindset always think about
what could go wrong, it's about making sure the property is truly a good investment for you
and your investors. And by underwriting like a pessimist, it places you in a seat
to look at the property to make sure all the numbers they've given you are accurate,
make sure the rent numbers they've given you are truly what they say they are and have the ability
to go up as we want to invest in properties where rents can go up. But underwriting like a pessimist
helps you take the emotion out of the investment. One of the things you want to do in your
underwriting is make sure you don't get emotional about properties. We're not buying bushes, pretty
shutters and nice neighbors. That's not why we buy properties. Although those are great things to have,
we buy properties that create great returns and safe places for our tenants, and that's why we pick
certain properties. So, when you're underwriting, make sure you underwrite like a pessimist.
One of the most valuable things you can have when you're underwriting properties is a great tool
and I've created one for you. Click the link in the description and you can snag a copy of
our deal analyzer so you can start analyzing deals like a pro.