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
Email [email protected]
Resources
Episode 89
Episode 77
Free eBook: The Secret to Raising Money to Buy Your First Apartment Building
