by Theresa Bradley-Banta
Are you ready for a little tough love on multifamily real estate investing?
If you really, really want to succeed as a multifamily investor—and you are just getting started—these tips are for you.
1. Do a single-family deal, or two
Although some investors jump straight into multifamily investing, it’s a good idea to get your feet wet first.
When you invest in a single-family property you have an opportunity to test your psychology around:
- Investing your own and other people’s money
- Making offers
- Negotiating with sellers and contractors
- Making quick decisions
- Taking leadership
- Working with partners
- Accepting a degree of risk
Doesn’t this make sense? If you cringed at the thought of doing any of the things listed above, then it’s a good idea to get started on a smaller investment property.
I think it is essential that you get some education and practice as a real estate investor before committing yourself to a multimillion dollar investment. Unless you are an investor with significant capital to purchase a property and hire experienced team members to do the work for you, start small.
You’ll never do a deal sitting in front of your computer or television or other electronic distraction.
To be successful at multifamily real estate investing you must start:
- Looking at listings and touring properties
- Talking to other investors and getting your funds lined up
- Driving around neighborhoods
- Interviewing commercial brokers
- Building your real estate investing team
If you’re not out connecting and talking with professionals, prospective partners, management companies and other industry professionals you can’t expect to find a potential investment property or build your team.
3. Pick a market
This is the best way to break through analysis paralysis. You will probably look at a minimum of 5 or 6 markets before you settle on one. Then it’s time to drill down to the submarket level.
Which neighborhoods are best? Where will you have the best opportunity for success?
Need help? Download my real estate market checklist (it’s free) and hit the streets. Drive around. Talk to the locals. Meet the pros such as brokers and property managers who specialize in that market.
And if you like checklists, here’s another good one (also free): Multifamily Investing Checklist.
4. Network like there’s no tomorrow
Everyone knows someone who has had success investing in residential real estate. And most of those investors would be happy to talk to you if you picked up the phone and called them.
Ask your friends, family, teachers, your hair stylist and your letter carrier—you get the idea. Start networking with everybody who has had experience investing in residential real estate. This is a great way to find mentors.
A word of caution. There are many different asset classes of real estate. If you are committed to investing in multifamily residential real estate, then don’t be tempted by other asset classes such as self-storage or retail.
Pick your asset class and become an expert.
5. Make a commitment
Multifamily real estate investing is not a hobby. And success doesn’t happen overnight.
How much time can you set aside each day to advance your education and to pick up the phone and start networking? Are you able to spend at least 45 minutes to an hour on a daily basis working on your real estate investing career?
Two hours of intense activity every two weeks is just not going to cut it. Time flies. It’s easy to be well-intentioned only to find yourself thinking, “Oh no! I’ve been completely distracted and I haven’t spent one minute on real estate in the last couple of weeks.”
Can you commit to a regular, daily schedule? And stick with it? If the answer is, “Yes!” you will succeed.
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