The Key to Success in Apartment Investing: Having a Good Team - Multifamily Real Estate
With Percy Nikora, Co-Founder
So, when you fix and flip a property, there are some similarities with large-scale multifamily, and there are some differences. We'll touch on both. The first similarity that comes to mind is having a good team because when you're doing fix and flip, at least at scale, you want to have a good broker on your team who is helping you find and source good deals or he's getting you access to those properties, so you can take a look at them.
You want a good contractor, and that's probably one of the key roles there; somebody you can trust; make sure they're doing good work; also giving you good prices; they're sticking to their schedule - a trustworthy contractor. You want a good attorney - making sure that you cross all the T's; dot all the i's. Then, if you're doing a lot of properties, you want a good property manager taking care of those property or at least making sure that you have those processes in place.
Those same things apply to multifamily, as well. It's just on a much larger scale. When you're flipping houses, it's generally - depending on the area you're in - it could be anywhere from, let's say, $150,000, $250,000, $300,000. With apartments, you're flipping $10 million, $15 million, $20 million, $30 million deals, so it's just a different magnitude.
You have to make sure that you do your due diligence before getting into the deal. The underwriting is super-critical in multifamily deals. Yes, it takes some time to find those assets but analyzing markets, knowing which markets are the right markets, analyzing the specific financials of the particular property are key. We'll get into more detail on that.
If it's a Value-Add project, where you're doing a significant amount of improvements to the property, you want to make sure you have a good contractor or team of contractors, really, to work on the property to make sure that you can get the work done in the budget and on schedule. Then, a good property manager to make sure that you're leasing the property; operating it well; the current tenants are happy in the property. Just to help you continue to improve the net operating income of the property, which is really the entire game when it comes to multifamily properties.
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