How to Scale a Real Estate Business
With Percy Nikora, Co-Founder
We finance it, but, again, that was all still focused on single family. Then, when you get to a certain point, I had a construction crew; I had focusing on fixing these properties, but we would still be backed up. I would have three, four properties lined up for them just sitting there to start working. We were like, well, maybe there's a way to scale this a little better.
That's when we started to look into it in more detail and came across the multifamily, which to me, initially, I thought multifamily means there's some huge corporation that owns this apartment complex. I never thought that individuals, like the common person, could be an owner in an apartment complex. When I started to dig into it, you start realizing, no, many of the apartment complexes are actually owned by individuals or small groups. That's when I initially started to look at maybe a 20- to 50-unit property that I thought I would just buy by myself. When you run the numbers on that.
I'd say a smaller multifamily, up to 50 units. When you run the numbers, you realize that it's very hard to have a dedicated sales team on that property and dedicated maintenance for a property that size because there isn't enough income coming in to justify the payroll for that team. So, running the numbers, it started to seem like about 100 units is what you need where the numbers start making sense to have dedicated sales team, dedicated maintenance. So, we started to focus on that property type. That's when I met Ed. He was also interested in that type of property. We created Penn Capital and started to pursue those.
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