346: The Multifamily Investing Masterclass: How to Get Started in 2024 w/Andrew Cushman
Dec 7, 2023
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Andrew Cushman, real estate investor and expert in multifamily investing, shares why now is the perfect time to start in the multifamily market. He discusses funding options, deal analysis tips, building your team, and pitching to investors. The podcast also covers the importance of accurate numbers, transitioning from house flipping to multifamily investing, finding the right areas to invest, and resources for market verification.
Multifamily investing is advantageous in the current market due to lower prices and interest rates.
Thorough due diligence, realistic assumptions, and conservative numbers are crucial for successful multifamily investing.
Building a solid team, including property managers and experienced professionals, is essential for multifamily investing success.
Deep dives
The Benefits of Getting Started in Multifamily Real Estate
In this podcast episode, Andrew Cushman discusses the advantages of getting started in multifamily investing. He highlights how the current market conditions, including lower prices and interest rates, present a great opportunity for new investors. He emphasizes that buying investment properties at the right price and focusing on cash flow can lead to long-term success. Andrew also shares his personal journey of transitioning from flipping houses to real estate syndication and offers insights on building a team, finding the right markets, and conducting thorough due diligence.
Mistakes to Avoid in Multifamily Investing
Andrew Cushman shares valuable lessons from his own experiences in multifamily investing. He discusses common mistakes made by investors, such as being overly optimistic in underwriting and underestimating expenses. He also highlights the importance of realistic assumptions and conservative numbers when analyzing deals. Andrew emphasizes the need for thorough market research, including population growth, job growth, income levels, and crime rates. He advises investors to leverage reputable data sources and engage with industry experts and brokerage firms to gain insights into potential markets.
Building a Strong Multifamily Real Estate Team
In this podcast episode, Andrew Cushman provides guidance on building a solid team for successful multifamily investing. He emphasizes the importance of property management, whether self-managed or third-party, and recommends a collaborative approach to learn from experienced managers. Andrew also highlights the need for reliable contractors, attorneys, loan brokers, and insurance brokers. He stresses the importance of finding professionals with experience and expertise specifically in the multifamily sector. Lastly, he advises investors to leverage resources like David Green's book on long-distance real estate investing and to diligently research and verify market data.
Funding a Multi-Family Deal as a Rookie Investor
As a rookie investor looking to fund a smaller multi-family deal, there are several options available. One option is to find joint venture partners who can provide the necessary capital while you contribute with your sweat equity and management responsibilities. Another option is syndication, where you find the deal, operate it, and offer passive income and wealth creation opportunities to potential investors. It is crucial to frame syndication as providing a service and an opportunity rather than asking for money. Private debt is also an option, especially for larger investment amounts. Another consideration is building a strong team of third-party professionals, such as lenders, attorneys, and contractors. Referrals from peers and industry professionals can help you find and vet these team members. While longer hold times of 10 years may be more challenging to pitch to investors, you can structure deals with flexible exit strategies, allowing them the option to continue holding the property if it proves to be profitable. It is important to prioritize experience, building a track record, and establishing relationships in the initial years of your investing career.
Adapting to Current Market Conditions in Multi-Family Investing
In light of current market conditions, there are a few adjustments to consider for multi-family investing. Lower leverage is now preferred, with loan amounts ranging from 55% to 65% instead of the previously common 75%. Holding properties all cash is also being explored to reduce the risk of loan issues and provide more flexibility in uncertain market conditions. Longer hold times are recommended, with a shift from a typical two to three-year timeline to six, seven, or even 10 years. Planning for a longer hold allows for market shifts and better opportunities for refinancing. It is important to focus on building experience, a track record, and relationships with lenders, brokers, and contractors. Referrals from trusted sources can help identify top team members. While it might be more challenging to convince investors to commit to longer hold times, demonstrating a strong track record, providing clear exit strategies, and emphasizing the potential for increased profitability over time can help secure investor buy-in.
Multifamily real estate investing can be scary to a new investor. After all, buying more units requires more money, more resources, and a larger team. But today’s guest is here to show you that multifamily investing is not nearly as intimidating as it may seem and why NOW is the perfect time to get started!
Welcome back to the Real Estate Rookie podcast! In this episode, Andrew Cushman delivers a masterclass in multifamily real estate. Andrew got his start flipping houses for profit, only to find that he was missing out on the consistent cash flow and long-term appreciation of buy and hold properties. So, he dived headfirst into the world of multifamily investing. Today, he shares how he landed his first multifamily deal—the good, the bad, and the ugly.
If you’ve ever considered buying multifamily properties, Andrew explains why you should start now. He also offers some essential tips for investing in today’s market and provides a wealth of resources to help you define your perfect buy box. Finally, you’re going to need the right people around you to tackle multifamily real estate. Andrew shows you how to build your team and how to pitch a long-term buy and hold property to potential investors!
In This Episode We Cover:
Why NOW is the perfect time to start investing in multifamily real estate
Three ways to fund your first multifamily deal (with other people’s money!)
