All roads lead to multi-family. It seems that no matter how you get your start in real estate, the vast majority of investors come to the same conclusion: For passive, everlasting cashflow, multi-family is the way to go.

Jack Bosch came to the United States from Germany in 1997 to finish his college degree. He worked in the corporate world for several years, but soon found that it did not afford the life he wanted. His visa was dependent upon keeping his job, yet the company that was struggling, so Jack was inspired to start a company of his own.

Attracted to real estate because of its cashflow potential, Jack got his start flipping land. Over the course of three years, he developed a system that allowed him to do 3,800-plus deals, and he achieved financial freedom in a short time. Jack eventually moved into the single-family space, developing a portfolio of rental properties, and he finally graduated to multi-family in the last year. Today he shares the specifics of his transition to multi-family, his experience raising money for the first time, and his advice for investors who dismiss apartment buildings as an advanced strategy. Listen as he explains why he would have liked to get into multi-family sooner, and how you can get started in the space with no prior experience.

Key Takeaways

[2:12] How Jack got involved in real estate

• Constant travel for work
• Only two weeks’ vacation
• Not the life he wanted to live
• Company struggling, many lost jobs
• Visa dependent on employment
• Desire to start own business
• Real estate appealed because of cashflow

[4:00] Jack’s start in flipping land

• Could sell land for seller financing
• Generate long-lasting passive cashflow

[5:36] How Jack defines a transaction

1. One-time cash deals (flip house, get paid once)
2. Temporary cash (give loan, receive interest)
3. Monthly payments (flip land for seller financing, receive down payment + monthly installments for six to eight years until paid off)
4. Forever cash (passive, everlasting income via multi-family)

[8:47] Jack’s transition to multi-family

• Began working real estate in 2002
• As of 2009, still hadn’t touched rental properties (thought too complicated)
• Discovered houses available for $50/ft²
• Purchased several dozen, rehabbed and managed themselves
• Made mistakes (bad tenants, spent too much on rehabs)
• Eventually found good property managers
• Learned to systematize
• Still not hassle-free (deal with one property at a time)
• Realized multi-family properties provide buffer

[12:52] Jack’s advice around the multi-family learning curve

• Acquisition, sourcing, negotiation, analysis and management processes are different
• Look for a partner-expert to learn from
• Jack did first deal on 93-unit in Louisiana with experienced friend
• Experience was ‘hands-on MBA in multi-family’
• Now building own team, additional funding sources
• Still works with partner on bigger projects
• Looking to build out own portfolio as well

[18:10] Jack’s experience with raising money

• First time on multi-family deal
• Benefitted from having reputation in market
• $1.4M raised in short time
• Felt responsibility as steward for someone else’s money

[21:01] Jack’s conclusions about multi-family

• At top of favorite investment methods list
• Securing good property management company is key
• Low risk, high reward (extremely safe investment)
• 93-unit property has doubled in value
• Recession-proof (extraordinarily low default rate)

[22:48] Why Jack would have liked to start multi-family sooner

• Cashflow would have been multi-fold higher
• Single-family experience did teach building, rehab
• Could have gone right to multi-family with proper guidance
• Employee mindset, thinking small held him back
• Success with early investments helped grow thinking
• Systems in place to make business scalable
• Some aspects of multi-family are easier than single-family

[28:20] Jack’s advice for investors who dismiss multi-family as an advanced strategy

• Shadow a coach/mentor
• Mentor acts as ‘time compressor’
• Help with mental hurdles, analyzing numbers

[30:26] What Jack is excited about

• Cashflow affords family opportunity to travel (Trips planned to Europe, Asia, Germany, South America)
• Business continues while they travel
• Looking to secure 5,000 units in five years
• Transform lives of investors (up to 16% yearly average returns)

Connect with Jack

Jack on Facebook

JackBosch.com

JackBosch.com/apartments

JackBosch.com/land

Mastermind for Business Owners

Resources

TheMichaelBlank.com

Michael’s Products

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

Yes, crowdfunding is out of reach for the average newbie syndicator. But if you’ve got a great deal and a willingness to hustle, it is possible to partner with a larger real estate company and take advantage of the capital available through crowdfunding. Platforms like Realty Mogul are looking for sponsors with a track record, so if you don’t have one—find someone who does.

Jilliene Helman is the CEO of Realty Mogul, the premiere online marketplace for real estate investing. The platform employs cutting-edge technology to connect its network of 130,000 registered investors looking for passive investments in commercial real estate with established real estate companies looking to acquire and operate commercial properties.

Realty Mogul is a marriage of Jilliene’s affinities for financial services and technology. She founded the company in 2013 to take advantage of the opportunities around crowdfunding afforded by the JOBS Act. Today she discusses why Realty Mogul chose to focus on the commercial space, the types of investments the platform offers, and the Realty Mogul definition of a good deal. Learn about the evolution of the crowdfunding industry, and heed Jilliene’s advice about partnering for aspiring syndicators.

Key Takeaways

[2:33] How the crowdfunding industry has evolved

• Started five years ago with passage of JOBS Act
• Has become more and more mainstream
• Began with donation-based sites (e.g.: Kickstarter, Indiegogo)
• Evolved into investment-based crowdfunding (i.e.: commercial real estate)
• Since 2013, Realty Mogul has raised $300M online
• Will continue to grow, scale
• Over $1B in invested capital through crowdfunding this year alone
• Provides investors access to private transactions

[3:55] Why Realty Mogul chose to focus on the commercial space

• Huge opportunity in single-family space early on (2013-2015)
• Banks off-loading residential properties
• Not easy to make money doing fix and flips
• Chose to focus on existing properties, tenants and cashflow
• Less risky than vacant residential property being renovated

[4:54] The types of investments Realty Mogul offers

• Joint venture (common) equity investments
• Paid last (riskiest part of capital stack)
• Gets piece of appreciation
• Preferred equity investments
• Paid before joint venture equity
• Receives flat, pre-negotiated rate (doesn’t get any of appreciation)
• Mezzanine debt investments
• Senior mortgage debt investments

[6:54] What Realty Mogul is looking for in a sponsor

• Don’t do business with first-time sponsors
• History, track record of success
• Real estate company with experience in market, property type
• Investors want to work with sophisticated real estate companies
• Typically don’t work with solo operators
• Looking for full-time sponsors with own company, employees
• Serious and professional about execution in investing in real estate

 [8:34] Jilliene’s advice for aspiring syndicators

• Do a transaction
• Raise capital from friends, family
• Add value, build a track record

[10:12] Jilliene’s guidance around partnering with a larger real estate company to employ crowdfunding

• If have solid deal, no reason you can’t partner
• Will have to pay real estate company
• Won’t have control of transaction
• Realty Mogul requires one sponsor to have final say

[11:47] What Realty Mogul defines as a good deal

• Every deal is different
• Focus on cashflowing real estate (existing tenants)
• Majority of deals are Class B assets in secondary markets
• Look for opportunity to value-add
• 7-8% average cash-on-cash return to investors
• 15% IRR net to investors

[14:13] The requirements for passive investors on Realty Mogul

• Public, non-traded REIT open to all investors (diversified pool of commercial real estate investments)
• Private transactions limited to accredited investors (income above $200,000 or net worth above $1M)

[15:28] The process of becoming a passive investor with Realty Mogul

• Sign up for user account
• Select transaction
• Entire experience is digital
• REIT is blended vehicle
• Accredited investors pick and choose specific properties

[16:40] The benefits of working with Realty Mogul

• Track record
• Over $300M invested in commercial real estate
• Real estate companies do multiple transactions (speaks to experience)
• Network of 130,000 investors

[17:23] How Realty Mogul came to be

• Jilliene worked in banking (wealth management)
• Wealthiest clients were real estate investors
• With JOBS Act, Jilliene saw opportunity
• Blends her passions—financial services and technology
• Mission to help people generate wealth via real estate investing

[18:22] Jilliene’s take on the future of crowdfunding

• Will continue to grow
• More and more mainstream
• Investors more comfortable with doing transactions on internet
• Billion-dollar industry

Connect with Jilliene

Realty Mogul

Resources

 Deal Desk

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

What gives a 27-year-old with no experience in apartment building investing the audacity to swing for the fence?

Patrick Duffy grew up in Southern California before heading east for college. After graduating from Harvard in 2013, he returned to SoCal to work as a commercial real estate banker and later for a hedge fund, buying non-performing mortgages. He grew up around real estate, his family owning a multi-family property since the 1950’s, and he had always intended to invest in apartments—as soon as he had the money to do so.

Before long, Patrick was unhappy at his job, so he started reaching out to investors he had lent to in order to get clarity on how to analyze deals. Despite his lack of experience on the principal side of real estate, Patrick started studying LoopNet and set the goal of securing 100 units in two years. Eventually, he discovered Michael’s Deal Desk resource, and used the Syndicated Deal Analyzer to get feedback on a 69-unit property in Memphis. The deal met Michael’s criteria, and the two forged a partnership.

Today Patrick explains the steps he took to research the Memphis market, how he made use of the act ‘as if’ approach to secure a letter of intent, and his best advice for working with investors. Listen in as he shares the mindset that helped him swing for the fence on a multi-family deal and how doing his first deal has changed the game for Patrick, as he aspires to reach 1,000 units in the next 12 months.  

Key Takeaways

[3:30] How Patrick landed on the partnering strategy to finance multi-family

• Briefly considered flipping single-family
• Preferred multi-family, but biggest block was capital
• Looked at creative financing options
• Partnering seemed like most feasible route
• Goal to secure 100 units in two years

[6:04] How Patrick found the Memphis deal

• Clarity re: how to analyze deals
• Practiced via LoopNet (comparing markets, packages from brokers)
• Underwriting to get feedback
• Memphis market seemed ideal (cap rates, unit sizes, price)
• Reached out to learn about Memphis market
• Found 69-unit deal on LoopNet
• Submitted to Syndicated Deal Analyzer
• Positive feedback from forum
• Called broker on New Year’s Eve

[9:23] Why Patrick continued to move forward

• Nothing to lose
• Deal met criteria for partnering via Deal Desk
• Act ‘as if’ approach to secure LOI

[11:13] Michael’s partnership with Patrick

• Impressed by Patrick’s thorough research
• Surprised by return (Memphis not one of published geographies)
• Got contract from seller, proposed changes
• Built team as went (property manager, lawyer)
• Patrick took initiative
• Under contract with seller
• Wire EMV
• Collect due diligence docs
• Financial due diligence process
• Create investor package
• Met in Memphis to look at property
• Michael sent sample deal package to investors
• Acquired financial commitments
• Hired SEC attorney
• Started appraisal process

[13:18] Patrick’s experience working with investors

• Michael’s network eager for deals that fit criteria
• Addressed questions about specifics of market
• SEC attorney had drafted necessary documents
• Used DocuSign to track eSignatures

[15:23] The closing process for the Memphis 69-unit deal

• Loan approved, investors wired funds
• Patrick received acquisition fee of $23,000
• Also reimbursed for expenses incurred during due diligence

[16:25] The impact of doing your first deal

• Only so much can be taught re: what to expect
• Once learn to partner, can scale quickly
• Feel more comfortable and taken more seriously
• Brings down barriers
• Patrick under contract on 196-unit deal two weeks later
• Expects to hit 1,000 units in next 12 months

[19:50] Why size isn’t a factor for Patrick

• It’s about process
• Anything under 500 units is viable
• Don’t worry about equity
• Finding deal is the issue (not money)

[21:35] Patrick’s advice for aspiring multi-family investors

• Take advantage of Deal Desk resources
• Does require high level of commitment
• Hard work is worth it

Connect with Patrick

Email: pduffy32@gmail.com

Resources

Deal Desk

Syndicated Deal Analyzer

Ultimate Apartment Investing Course

The Financial Freedom Summit Live

LoopNet

DocuSign

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

Landing your first multi-family deal is much like pushing over the first in a series of dominoes: The second and third deals fall in rapid succession. In most cases, it is possible to replace your income one to three years from the moment you decide to change your life.

Brad Tacia’s story adheres to this Law of the First Deal. He was an engineer by trade, working for an auto parts manufacturer in Detroit. Though he survived the recession, Brad knew that he needed a backup plan. He began his foray into real estate with single-family homes, using a portion of his 401(k) to facilitate the investment.

Brad reached a turning point when he realized just how much of his daughter’s life he was missing. To speed up the process of achieving financial freedom, Brad and his wife used the Dave Ramsey program to cut their expenses and pay off their house—which allowed them to fund their first multi-family deal with a home equity loan. Brad’s second and third deals followed quickly on the heels of the first, and in two years, he had replaced his income. Brad quit his W-2 job, and now he controls 160 apartment units total. Listen as he explains his experience with Dave Ramsey’s Financial Peace University, how he funded his first three multi-family deals, and his secrets to becoming financially free in just two years. He also shares his knowledge around syndicating deals as well as the details of how his life has changed, making every day feel like Saturday!

Key Takeaways

 [4:26] Brad’s motivation to try real estate

• Recession hit in 2008
• Depressing time, had to lay people off
• Wanted to develop Plan B
• Read Rich Dad, Poor Dad and The Millionaire Real Estate Investor
• Initial ten-year plan to buy ten single-family houses

[6:36] What precipitated Brad’s shift to multi-family

• Daughter asking, “Do you have to work tomorrow?”
• Desire to spend more time with family
• Realized could achieve financial freedom faster with multi-family

[7:16] How Brad funded his first multi-family deal

• Used Dave Ramsey program to cut expenses
• Paid off house
• Funded 12-unit with home equity loan

[8:14] Brad’s experience with Financial Peace University

• Listened to Dave Ramsey audio discs with wife
• Employed common sense budgeting
• Made lifestyle adjustments (less eating out, cash budget for groceries)
• Paid off credit card debt, auto loans and house
• Felt safe in case of another downturn

 [11:23] Brad’s next two multi-family deals

• Second deal six months after first
• Bought another 12-unit with partner (property manager)
• Third deal (63-unit) four months later
• Bought 50/50 with different partner (realtor)
• Replaced income in under two years

[13:23] How Brad developed the confidence to do his first multi-family deal

• Reading books
• Training, networking
• Honed skills in financial analysis

[14:01] Brad’s advice around funding multi-family deals

• Look for cheapest method
• Home equity loan only 3.3% interest
• IRA (taxes, penalty for withdrawal)
• Syndicating

[15:19] Brad’s experience syndicating deals

• Awkward to ask for money at first
• Not as difficult as imagined
• Frame as offering opportunity for 15% average annual ROI

[16:41] Brad’s secrets to becoming financially free in two years

• Get your expenses under control
• Employ courses that teach step-by-step process
• Income will snowball

[18:00] The significance of the first deal

• Learn the language
• Contacts, team in place (property manager, banker, inspectors, real estate brokers)
• Understand mechanics of deal
• Become addicted to cashflow
• Want to grow, take pressure off day job

[19:27] How Brad found time to do real estate on the side while working a demanding job

• Full-time engineering manager with 23 employees (50-60/hour weeks)
• Looked for deals before work
• Made phone calls during lunch hour
• Saw apartment buildings after work, weekends

[20:20] How Brad’s life has changed

• Building stronger relationships with family, friends
• Working out, eating well
• Getting enough sleep
• Completing projects had put off
• Bonding with coaching students (Ultimate Apartment Investing Coaching Program)
• Quitting full-time job allows to think more strategically, design life to make impact

[22:30] Brad’s perfect day

• Wake up without alarm
• Work out
• Family time
• Coach students
• Look for new deals
• Take vacations at will
• Every day feels like Saturday

[23:22] How Brad wants to be remembered

• Family man
• Mentor
• Inspire people to take risks (it’s risky not to go for it)

[24:34] Brad’s best advice for aspiring multi-family investors

• It’s more doable than you realize
• Choose five-year retirement plan over 40-year retirement plan

Connect with Brad

Ultimate Apartment Investing Coaching Program

Apartment Investors of Michigan Facebook Group

Resources

Apartment Building Investing Session #55

Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not by Robert T. Kiyosaki

The Millionaire Real Estate Investor by Gary Keller

Bigger Pockets

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

The Financial Freedom Summit Live

Review the Podcast on iTunes

What is stopping you from achieving financial freedom through apartment building investing? Is it because you don’t have single-family experience? Are you intimidated by the perceived complexity of the multi-family space? Or maybe you think you don’t have enough money to consider pursuing multi-family deals? Today’s guest has encountered and overcome all of these limiting beliefs, and today he reveals how to get out of your own way and get on the road to financial freedom.

Tyler Sheff is the founder of CashFlowGuys.com and the host of the Cash Flow Guys Podcast. He was making six figures as a merchant mariner when he and his wife took a hard look at their future. Tyler didn’t want to wait until he was 65 to enjoy life, so he took compensatory time and gave himself six months see if real estate investing would prove viable and provide the cashflow necessary to attain financial freedom.

In just 11 months, Tyler had replaced his income. At that point, he had invested in 26 units in Florida and Tennessee – using none of his own money. Now he leverages his 17 years of experience to demystify the real estate investing space, encouraging others to focus on cashflow and take massive action toward their goals. Today, Tyler shares his journey, explaining how he landed his first few multi-family deals, why single-family experience is unnecessary in the apartment building space, and how he employs relationship marketing to raise capital. Listen in as he unpacks each of the limiting beliefs that held him back and reveals how to overcome ‘analysis paralysis’ and move forward with your dreams of building passive income and escaping the rat race.

Key Takeaways

 [2:55] How Tyler got started in real estate

• Desire to ‘get rich quick’
• Made money as house flipper
• Sold portfolio before market crash
• Acquired huge tax bill
• Went to work for government as merchant mariner
• Climbed ranks to six-figure salary

[4:32] Why Tyler returned to real estate

• Way to legally, ethically avoid taxation
• Focus on cashflow this time (not appreciation)
• Job on ship kept away from family
• Not feasible to continue for 20 years (physical toll)
• Wanted better quality of life, time on hands

[8:08] Tyler’s experience as a landlord

• ‘Accidental landlord’ in late ‘90’s to maximize returns on sales of fix and flips
• Got into multi-family in 2014 to scale quickly

[9:10] Tyler’s first multi-family deal

• Pre-approved for VA mortgage
• ‘For Rent’ sign on four-plex
• Paid zero down, received check for $1700 at closing
• Moved into one unit, rented other three
• Rehabbed quickly
• Cashflow right away
• Converted one unit to vacation rental
• Cashflow increased from $1,200 to $5,000/month

 [12:12] Tyler’s next two deals

• Learned to raise capital (Secrets of Successful Syndication seminar, Sam Freshman book)
• Built team, cut teeth on ten- and 12-plex in Memphis
• Tennessee known for cashflow (not organic appreciation)
• ‘Overimproved,’ didn’t see anticipated ROI
• Learned to analyze needs of tenants
• Brought to total of 26 units in 11 months
• Capital raised through IRA lenders
• Tyler able to quit government job

[17:22] The limiting beliefs that held Tyler back

• Analysis paralysis (first deal so good, couldn’t stop comparing)
• Fear of making mistakes was crippling

[19:22] Why single-family experience is unnecessary to enter the multi-family space

• ‘Almost better off with no experience’
• Tyler feels single-family background made him too conservative

[21:49] How Tyler achieved multi-family deals without using any of his own money

• Partnered with experienced property management company
• Enlisted exceptional legal and accounting teams
• Experience of team led to capital (didn’t matter that Tyler was inexperienced)

[23:05] How Tyler leveraged ‘relationship marketing’ to raise capital

• Started podcast, Cashflow 101 workshops
• Positioning self as expert led to referrals
• Matched investors with experienced syndicators
• Learned from those syndicators (willing to help)

[24:44] Why the complexity of multi-family is a limiting belief

• Same as single-family, just larger scale (only one roof)
• Tyler contends apartments are easier to work with
• Many moving parts, must be able to manage others effectively

[25:50] The importance of Tyler’s first deal

• Critical in realizing he could do this
• Second and third deals built confidence as he encountered and overcame problems

[26:56] How Tyler’s life has changed

• Doesn’t have to ‘hunt’ for next check as buy and hold investor
• Receives mailbox money each month
• Continues to attract capital, source opportunities
• Time available to educate others with free content
• Freedom to spend time with family

[29:51] Tyler’s perfect day

• Watch sunrise in kayak
• Fish all morning
• Work on podcast, instructional video in afternoon
• Help others attain same kind of financial freedom

[30:27] Tyler’s advice for aspiring multi-family investors

• What do you have to lose?
• Only tangible thing is time
• Educate yourself and take action

[31:02] How Tyler wants to be remembered

• As change-maker who ‘made difficult stuff simple’

Connect with Tyler

Cash Flow Guys

Tyler’s YouTube Channel

Resources

Secrets of Successful Syndication

Principles of Real Estate Syndication by Samuel K. Freshman

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building