Getting into the multifamily game?

In the recent years I came across a fair number of financially qualified individuals who want to get into the multifamily game but they don’t know where to begin. Whether they should just put their money into a fund and trust that this vehicle will be the answer or do they go ahead and try to make it on their own. The answer to that is not that simple. There is a tremendous number of factors that come into play and I will mention a few major ones that everyone needs to be aware of.

To start off….you have to ask yourself how much of an actual real estate market knowledge do you have? Reading a few articles here and there doesn’t make you an expert and chances of you winning at the game are slim to none if you choose to take the “I’ll do this myself” path. Real estate is a very complex environment and needs to be studied and scrutinized from all the angles. An experienced developer will tell you that they look through hundreds if not thousands of deals before they zero in on something that makes sense to them. 

Another very important item to consider is how much time do you want to allocate and be involved in the process. From market research, entitlements, financing, construction to leasing and stabilizing the property….it takes A LOT of time and effort to get things done properly. So, if you have an existing business that is doing very well and allows you to allocate funds so you can engage into becoming involved in the multifamily world then you should not loose focus of that. Find the right partner that can take your vision of becoming a multifamily owner and turning it into reality. 

Another important point that I would like to bring up is the question of what development size do I want to get into? I personally underwrote many many projects and those that consist of under 25 units tend to be somewhat difficult to make decent profits on. Of course, the circumstances of each project will vary from location to location but as a general rule of thumb to me I would stay at the 25+ unit level.

If anyone is interested in getting into the real estate development environment and would like to discuss a certain project their thinking off getting into or just want to bounce off some ideas feel free to reach out.

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