Multi-Family Investments: What's the Risk?

[Cory Sperle]

The best education out there is to mentor from someone who's done what you want to do. The best way to learn the ropes in multifamily is to joint venture with a pro to learn the ropes, and this is the path I took.

 

[Geoffrey]

Thank you for that and I agree. Although I also feel all sources of knowledge are important and a good precursor to approaching mentors.

A few questions to put out there...

Given the rewards are so great, what deters or prevents investors from buying multi family? Is it that most people don't even take the option seriously because it seems too risky or out of reach, despite not knowing the facts? Is it that there are far fewer properties than people attempting to buy them?

And what is the success/failure ratio of those who do successfully make the purchase? Given the risks, what proportion of those who make the attempt get burned badly versus those who make a good investment for themselves?

And what distinguishes the actions leading to success from those leading to failure in this business?

 

[Thomas Beyer]

The stated risks can be mitigated through experience, cash reserves, very (!!) realistic assumptions and in depth research.

The biggest obstacle is the cheque size. On an 8-plex for $1M you need $250-300,000 and on a 20-plex for $2.5M 600-750,000.

The most common mistakes are
- overpaying
- overestimating rents
- underestimating vacancies
- underestimating repair, maintenance and capital expenses
- under estimating complexities and timelines getting a mortgage

And thus:
- being under capitalized

I've made millions for my co-investors and myself over the last 16+ years and the experiences are in a book ( on Amazon , search on my name and 80 Lessons ) and my white hair. All doable even in today's more muted markets. Cory has done well too as have a few other folks in REIN or non-REIN circles.