The first step to being successful in real estate is to understand the difference between being an investor and being an entrepreneur.
You may be one or the other…or both. If you have cash in hand and you are looking to invest in a deal and get a return on that cash; you’re and investor.
If you don’t have cash right now but are looking to create cash or cash flow from real estate; you are a real estate entrepreneur.
If you are an investor, your job is to find and work with credible real estate entrepreneurs to help you invest in quality real estate deals. It will also be your job to be able analyze your investments on your own. To “know, like, and trust” a general partner is good, but not good enough.
If you are a real estate entrepreneur, your job is to get the skill set in place that will allow you to create value for investors by finding really good deals. Knowing your market and analyzing deals on a regular basis will be the keys to your success.
Whether you are an investor or an entrepreneur, the basics of the business are the same. You need to know what a good deal is and you need to look at deals on a regular basis to find the good ones. This program was created with this in mind and will teach both investors and entrepreneurs the skills needed to build a multifamily investment portfolio.
Ultimately, there are only two major topics that you need to master in real estate. Deal flow and deal analysis.
Deal flow
Under this topic we start with selecting a market. I will cover this in detail in the course material. Once you have a market selected you need to focus on finding deals. It has been my experience that the world of multifamily properties can be divided into two categories. Complexes with more than 50 units and complex with less than 50 units. On the smaller assets it is best to go directly to owners. This is done in a variety of ways such as direct mail, cold calling owners, working with wholesalers or event texting.
When looking at larger assets (over 50 units) you will find that realtor relationships are the key here. Larger properties are typically sold through commercial realtors. I am not saying that contacting owners of larger properties directly wont work at all, but I am saying that the results drop off quickly with larger assets. My suggestion is that you analyze 3 deals a week in your market. If you cant find 3 deals a week to look at…get a bigger market.
Deal analysis
Deal analysis is the process of answering the question “Is this a good deal?”.
My definition of a “good deal” is one that makes more money than it costs to own. Your job as the buyer is to be able to look at three things to determine if this is a good deal for you. You will look at the seller’s income, expenses and the asking price for the property. With this info you can determine if this deal will work for you.
Here is the basic formula for analyzing a deal-
Income – Expenses = Net Operating Income (NOI)
NOI – Debt Service (Mortgage payment) = Cash Flow
Cash flow / Down Payment = Cash on Cash Return (CoC)
If a deal is priced right, it will cash flow. You job is to look at as many deals at it take to find good ones. It’s not quick and easy to build a real estate portfolio. It will take time and practice to get it right on a regular basis. This program is meant to help you accelerate your business model while mitigating as many risk and potential failures as possible. I have included 2 chapters from my book Real Estate Raw. These chapters will show you the beginning steps to getting started in multifamily.
Remember-
An education may cost money… but so do mistakes. What do you want to spend your money on?
Want to learn more about Multifamily Investing? Join our Facebook group ‘Real Estate Raw’ for live weekly education sessions.
