We’re talking about real estate. How to make it simple, why you should do it. We’re talking about income investing. Multifamily apartments, apartments. Thirty-two units, sixty units, one hundred units, two hundred units, three hundred units. These are deals that I’m looking at every day.
I started and bought one house. I learned from that one house that that was not investing. That was just me investing in a piece of real estate on a budget. When you invest in real estate, it has got to have a lot of doors and a lot of windows. The more doors and windows, by the way, the better. Of course, that holds true only up to a point. You have to be careful with any investment because you could have too many units in one place and that would put to high of risk on your investment.
People need to be involved in real estate. Start investing your extra money in real estate. Invest in real estate that produces income. I’m not talking shopping centers here. We’re buying apartments. We’re buying something indestructible, something people will have to live in.
For example, someone moves from Houston to Miami, Miami to Oakland Park, to Orlando. The first thing they do is not buy a house. The first thing they do is they rent a place to live.
So if you’re interested in real estate, there are four ways to buy real estate.
1. You can do it yourself.
If you attempt to buy multifamily real estate on your own, you need to know the market, know the deals, have your financing in place, know who is managing it. You do not want to invest in anything smaller than 16 units. 32 units would be your ideal first deal. Why? Because anything smaller than that won’t weather any kind of market downturn, won’t give you the scale to appreciate, leverage debt, won’t be large enough to have a management company to take care of the day to day and vacancies or produce positive monthly cash flow. How much time do you think you need to do it yourself? A lot, it’s a full-time job.
2. Wall Street.
This is the simplest, easiest way to do it. And the dumbest! You can buy stocks in companies like Equity Residential. Which is a publicly traded real estate investment trust that invests in apartments. You aren’t actually buying property or realizing any of the tax benefits that go along with it. You don’t get the benefits of real estate. You’re getting stocks. That is an investment in a stock that is not an investment in real estate. Your returns on a stock are dictated by the market. Not something I would recommend at all.
You could call somebody up and say, “Hey, I want to syndicate into your deal.” What a syndicator means is they basically, let’s say they’re going to buy a deal that takes $5,000,000. They raised all $5,000,000, okay? They raised all $5,000,000 from people like yourself. It’s called other people’s money. And then they go buy a piece of real estate and they make money on the fees of running that piece of real estate. I can pretty much guarantee your money’s going to go away. These people are buying a deal. They won’t buy with their own money. Here’s another way to look at it. It’s like the first time I got on the plane, I said, to the captain, do you feel good about the trip? If he’s willing to get on the plane, I’m willing to get on it.
Basically, you give the syndicator your money. They go buy real estate that you didn’t have the courage or intelligence to by yourself. They run it, they manage it, and they charge you for that.
4. The Anomaly. Investing with someone.
There’s a fourth way to do it. This is what I do. I backfill a deal so we can control the property, own the property. We do the deal, and then I allow accredited investors to come into the deal.
I basically buy property. We look at property every day. We buy it, we own it, we closed on it, we get the financing on it, and then we allow accredited investors to come back into the deal. We have a fund that can do that. If you’re an accredited investor and you want to invest with us, we know what we’re doing. We have the time, we have the money, we’re buying the property. I’m putting my own money in a deal saying I’ll buy this deal whether we raise the money or not. I don’t care because I know that the property that I’m buying will be worth more money 30 years from now than it is today.
I do what I can to make real estate investing made simple.
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