You need the right network of people around you in order to scale your multifamily real estate portfolio.
You can be the world’s best salesman, analyze a deal in 5 minutes, and have the picture-perfect deal in your hands … but if you’re not connected with the right people, none of that will matter because you need investors to raise the money from, a team to run the property, and experts to help with legal advice along the way.
In this article, I’m going to walk you through what it means to have the right network, what the components are, and how you can build it. This is the key to consistently finding deals, raising capital, and buying your first apartment building to become financially free.
The Challenges New Investors Face
If you’re reading this, you’re likely experiencing one or two of these:
- Brokers won’t take you seriously
- You don’t have access to money or deals
- You can’t consistently raise enough capital
I'm going to show you how to build your own network, which is the best way to solve all of those problems.
In my early days of apartment investing, I met with a guy who I wanted to raise money from. I was looking for $200K(since he just sold his company) but he wanted to deploy $1 million. That immediately put me outside of my comfort zone since I had to look into larger properties.
Your Network Boosts Your Credibility
You need a network for a couple of reasons.
- You’ll be taken seriously by investors and brokers
If you don’t have a lot of experience in the multifamily industry, important people won’t take you seriously. That means you’ll have trouble finding deals and capital. The best way to solve this (without lying about your experience) is to build a team of professionals around you.
The most important members are a:
- Property manager
- Lender
- Maybe an SEC attorney
You need property managers to analyze deals because they supply you with things like rent growth and expenses to put in the underwriting.
Lenders get you the loan and loan terms you need to purchase the property.
Now when you talk to brokers to find deals, you can tell them, “I'm working with Sam. He manages 3000 units. And Bill has underwritten $1 billion of loans last year and specializes in bridge loans.”
All of a sudden it’s about your team and their qualifications instead of you and your lack of them. The broker is not going to challenge you for your lack of track record if you have built a team.
Your Network Brings You Deals
- You’ll get access to deals and capital
In a multifamily syndication, there are two main roles: dela finder and capital raiser.
People fall into one or the other by their personalities.
As a deal finder, you’re more likely to be more numbers and detail-oriented. You can find and analyze deals with no problem, but you’re lacking the money and investors to close on it.
A capital raiser tends to be more outgoing and loves talking to new people. They also have access to higher-networth individuals but don’t like dealing with numbers. They need a deal in order to deploy the capital they have access to.
These two form the ideal joint venture partners in syndications and open the door to your first deal.
Your Network Backs You Up in a Deal
- You’ll need help when a deal goes live
Your first deal will be a brand-new experience, even if you have a background in single-family rentals. Even with a team and partner at your side, you’re still going to need help walking through the process.
So the third component of the importance of a support system are mentors and advisors.
How do you know what you’re doing is right? How will you prevent making a big mistake if you’ve never done something like this before? Are you underwriting the deal and not overpaying? Are you making the right assumptions?
You need someone experienced on your team. If you can network your way to someone more experienced than you who guides new investors on a volunteer basis, that’s great. It’s hard to do since they have their own agendas and aren’t obligated to help you out.
You may have to invest in that mentor and advisor.
This is why your network is critical. It’s not a business you can truck through by yourself. You need to start building out your network. Surround yourself with professionals, form partnerships, and start your search for mentors and advisors.
If you're currently following a do-it-yourself approach, that's fine. A lot of people do that. But you need to be aware that your first deal is going to take longer, be smaller, and you’ll probably make mistakes that’ll cost you time and money.
Looking to build that network right now? Consider working with experienced investors and our team.
We have an all-star lineup of full-time syndicators who’ll work with you through our mentoring program. Click the link below to see if this is right for you.
https://call.themichaelblank.com/clarity
To your success,
Michael Blank
