Todd Dexheimer always wanted to be a multifamily investor, but he got distracted by single-family rentals and fix and flips. When he stopped to take a hard look at his portfolio, Todd realized that when it came to return on investment, the rentals were destroying the flips. Worse yet, he was still in a holding pattern—waiting to ‘graduate’ to multifamily. What would his cashflow look like if he stopped wasting time and shifted his focus to apartment buildings?

Todd began his career as a high school teacher, but the meager pay and lack of job satisfaction had him looking for other opportunities. In 2008, he and his wife used their savings to purchase a rental property as well as a live-in flip, and before long he had a significant rental portfolio and 150 flips under his belt. But Todd never stopped dreaming about multifamily, and in 2016 he got back on track and purchased a 22-unit building in Cincinnati. Now he has a total of 106-units and the ambition to grow by another 800 units in 2018.

Today Todd explains how fear, distraction, and a lack of resources held him back from pursuing his multifamily dreams. He shares the details of a 15-unit deal that didn’t go so well, yet taught him several valuable lessons and set him up for future success. Todd discusses how a hard look at his portfolio got him back on the multifamily track and offers an overview of his last two apartment investments. Listen in for Todd’s advice around being taken seriously in a new market and learning from other investors to go big quickly, rather than waiting to ‘graduate.’

Key Takeaways

The Cliff’s Notes version of Todd’s story

• High school industrial tech teacher
• Developed interest in real estate
• Invested in single-family, duplexes and fourplexes
• ‘Graduated’ to multifamily

The problem Todd was trying to solve with real estate

• Little job satisfaction in teaching
• Liked interaction with students, but disliked politics
• Income not there, not fulfilled by work

Todd’s initial investment strategy

• Wanted to do multifamily, but lacked resources
• Found house for $60K, rent at $1,500/month
• Financed with savings
• Refinanced properties to buy more
• Started flipping houses, built rental portfolio

 Todd’s first multifamily deal

• Bought 15-unit with passive investor in 2013
• Building had plumbing issues that renovation budget didn’t cover
• 80% of profits went back into repairs
• Made money, but didn’t reach expected return

What Todd learned from his first multifamily deal

• Understand what type of building you’re buying
• Budget for necessary repairs, replacements
• Provide investors with appropriate financials
• Mind your books, understand expenses
• Don’t get distracted with other projects

What inspired Todd to pursue multifamily again

• Parted ways with business partner
• Realized rentals destroyed flips on ROI
• Conducted market research on multifamily

Todd’s second multifamily deal

• 22-unit off-market deal in Cincinnati
• 10% down payment, owner financing
• Equity, renovation financed through investor

Todd’s approach to being taken seriously in a new market

• Find commercial brokers through LoopNet, local sites
• Call to discuss specifics of what you’re looking for
• Follow up with email asking for recommendations
• Contact referrals (property managers, lenders, attorneys)
• Show up face-to-face, spend three days

Todd’s first syndication deal

• 84-unit building in Lexington, KY
• Heavy lift value-add ($9K/unit)
• 88% occupancy, rents low
• Improving C+ neighborhood
• 11 investors to raise $800K

The value of the first deal

• Learning sets up for future success
• Conservative underwriting = profit (even if things go south)

Todd’s advice to his younger self

• Get educated in multifamily, investing in general
• Surround yourself with right people
• Don’t get distracted from what really want

Todd’s insight for aspiring multifamily investors

• Okay to do single-family, flips to gain experience
• Find/learn from apartment investors from day one
• Go big quicker, don’t wait to ‘graduate’

How Todd’s life changed after he quit teaching

• Never nervous, very prepared
• ‘Every day is Saturday’
• Excited to grow real estate business

Connect with Todd

Venture D Properties

Email todd@venturedproperties.com

Todd on LinkedIn

Todd on Bigger Pockets

Todd’s Podcast

Resources 

Episode 89

LoopNet

Episode 77

Michael’s Coaching Programs

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

Review the Podcast on iTunes

‘Don’t worry about everything you don’t know today.’

Josh Sterling’s advice for aspiring real estate investors? Jump in head first and take massive action. In fact, if Josh could go back and offer some advice to his 17-year-old self, he would recommend skipping college and getting on the fast track to multifamily as soon as possible!

But Josh didn’t know that then, and he pursued a degree in aeronautical science from Embry-Riddle University. He got a job as a commercial airline pilot and had worked his way up to captain when the recession hit, and his hard work was rewarded with a demotion and a pay cut. Josh decided then and there that he needed a side hustle that he could control, and he landed on real estate. Josh was eventually able to quit his job and pursue real estate full-time, growing his portfolio to a cool 250 units.

Josh has also grown his business, building out his own property management team. Today he walks us through his first deals in the single-family space, discussing the challenges of managing 25 properties and how that struggle inspired his shift to multifamily. Josh offers his insight around building relationships with a few good brokers, describing how he has scaled to 250 units with the help of just two realtors. He explains his approach to multifamily syndication, sharing how multifamily allowed him to quit his job, go to work on his own terms, and have lunch with his 18-month old daughter any time he wants. Listen in for Josh’s advice about establishing credibility—with or without a track record—and getting on the fast track to multifamily.

Key Takeaways

What inspired Josh to pursue real estate

• Working as airline pilot
• Demotion with pay cut in 2008
• Looking for something could control

Josh’s first deal in September 2009

• $40K single-family in southeast Michigan
• Buy and hold strategy

Why Josh made the shift to multi-family

• Owned 25 single-family rentals by 2012
• Needed help with management
• Multifamily necessary to scale business

Josh’s first multifamily deal

• Colleague introduced to commercial broker
• Approached with 24-unit off-market deal
• Couldn’t get numbers to work, deal fell apart
• Seller reached out twelve months later
• Bought under land contract for $515K at 6%
• Upgraded units, occupancy rose from 42% to 100%
• Cash out refi after 14 months (valuation at $800K)

Josh’s next multifamily deal

• Same broker approached with 53-unit deal
• Used capital from refi of 24-unit property

Josh’s approach to raising money

• Share enthusiasm for real estate with family, friends
• Leverage portfolio for credibility

Josh’s first experience with syndication

• $1.3M building under contract
• Needed to raise $300K to close
• Put out sample deal package
• Fully subscribed in 24 hours

How quitting his day job changed Josh’s life

• Left in May of 2016 (owned 140 units)
• Work on own terms to grow business
• Aggressively looking for deals
• Fly to play golf, see concerts

What Josh would tell his 17-year-old self

• Skip college, buying first home
• Pursue multifamily right away
• View regular job as means to end

How to fast track a career as a real estate investor

• Get educated quickly
• Build relationships with brokers
• Don’t worry about bank financing
• Demonstrate credibility to raise equity

What Josh is excited about right now

• Building own property management team
• Building self out of day-to-day operations
• Focus on networking, maintaining broker relationships

Josh’s advice for aspiring real estate investors

• Take massive action
• Build reputation, relationships

Connect with Josh

Email: josh@epicpropertymanagement.com

Epic Property Management

Resources

LoopNet

Freddie Mac Small Balance Loan

Entrepreneurs’ Organization

Michael’s Coaching Programs

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

Review the Podcast on iTunes

If 2018 is YOUR year, the year you plan to do your first multifamily deal and get on the road to retirement, then the next step is to determine the route you will take to get there. There are four different roles you can play in a general partnership: syndicator, passive investor, balance sheet guarantor, or money raiser.

Today I’m getting into the nitty gritty of each of those four paths to financial freedom, exploring what’s important to each member of the team and how to get started. I begin with syndication, discussing the importance of analyzing deals, meeting with investors and building a team. If you want to be in the driver’s seat, then the role of the syndicator may be perfect for you. I go on to cover passive investing, outlining how to ask the right questions and find a partner you can trust. If you see yourself as more of a passenger on this road trip to retirement, then passive investing might be the part you play in a general partnership.

Another lesser-known role is that of the balance sheet guarantor, who cosigns the loan for another syndicator. I explain the circumstances under which a balance sheet guarantor is necessary and the benefits of signing on to a deal in this way. The fourth role is that of the money raiser, and I wrap with the networking skills necessary to take on this role. Listen in and learn the significance of getting educated in the multifamily space, building a working relationship with trustworthy partners, and getting on the road to retirement with apartment building investing!

Key Takeaways

What’s important to becoming a SYNDICATOR

• Learning to analyze deals
• Constantly raising money

How to get started as a SYNDICATOR

• Educate yourself with free content, invest in education
• Analyze deals, meet with investors and build your team
• Consider coaching (accelerate results, avoid mistakes)
• Avoid overwhelm by doing ‘next three things’

What’s important to becoming a PASSIVE INVESTOR

• Learn right questions to ask
• Find partner you can trust
• Transparency, integrity and communication
• Look at track record, team

How to get started as a PASSIVE INVESTOR

• Educate yourself enough to ask right questions, call BS
• Network at events like REIA, meetups or Financial Freedom Summit
• Find one or two partners, invest in multiple deals

What’s important to becoming a BALANCE SHEET GUARANTOR

• Required by lender when net worth of partners not > loan balance
• Willing to cosign loan for syndicator
• Risk exposure low, compensation varies
• Can receive 5-15% of general partnership

Who are ideal MONEY RAISERS

• Have capital themselves, ability to attract more
• Prefer networking to cold-calling brokers, analyzing deals

What’s important to becoming a MONEY RAISER

• Access to capital
• Finding trustworthy partner

How to get started as a MONEY RAISER

• Educate yourself enough to answer questions
• Start raising money TODAY

Resources

Partner with Michael

Invest with Michael

Deal Maker’s Mastermind

Syndicated Deal Analyzer

Sample Deal Package

Ultimate Guide to Buying Apartment Buildings

Michael’s Coaching Programs

Financial Freedom Summit

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

Review the Podcast on iTunes