I started investing in apartment buildings in 2014. Today, I own 140 units across seven buildings, have successfully flipped several homes, and there are a few things I wish I knew before investing. A first-time real estate investor can find success by hiring property management, finding a mentor and avoiding value-add apartment buildings.
Hire Property Management
If you’re a young owner, it is more likely than not, you’re working a 9 to 5 and will be for some time. This means you will have third party management. Be VERY thorough when you are interviewing potential managers. Don’t just go with the biggest group (you may get lost in the shuffle) and don’t just go for the cheapest (you will need some hand-holding for the first few deals, and you get what you pay for).
Find a Mentor
Find a mentor that has executed/accomplished a similar business plan to the one you’re creating. It is a business where people are inherently reluctant to share information, but there are good people to call. Ask about all the things that went wrong. Typically, the best lessons are found in the wrong decisions.
Avoid Value-Add Buildings
At least for the first few buildings, unless you have a family member or a best friend that is a master contractor that will work for free, avoid major value-add deals that will require time. There are a lot of unknowns in capital expenditures and a potential void in income generation. You’ll need every bit of income from the property as you start. When buying that first deal, make sure there are no major capital calls on the horizon and make sure you believe in that neighborhood.
You may overpay, and you will make mistakes, but just get started. If you want to do it, do it. The plan can be to hold long term or flip but just get into the first deal. The second will be easier, and the third will be even easier.
If you are looking to buy your first multifamily property in Chicago, don’t hesitate to reach out. Kiser Group always has an appealing inventory for new investors.