When you’ve decided to jump into multifamily investing, it’s easy to let enthusiasm carry you away; however, there is some practical advice that could save you from big mistakes down the road. We share tips for eager new investors from BAM founder and CEO, Ivan Barratt, in today’s BAM Blog…
Ready, Set…Slow Down
When you’re ready to get involved in multifamily investing, it’s easy to want to jump right in at the deep end. While Ivan has said that at some point you do have to just start working toward your goal, he also remains a huge advocate for learning and studying the industry. Although Ivan has worked exclusively in real estate since he graduated from I.U.’s business school, he’s never stopped listening to podcasts, reading new material and re-reading his favorite books, and working on building his ever-expanding knowledge base. Ivan recommends sales training, since learning how to communicate and share your ideas and get others to buy-in is a hugely important skill. We recently published a cheat-sheet of some of Ivan’s favorite books, with beginner and intermediate/advanced titles that you can find here. Another important tip from Ivan is to stay focused and work toward your goals in small steps, whether it’s meeting weekly with a mentor and/or setting aside time each day to work through a book or podcast.
Do Due Diligence
Doing due diligence matters when it comes to sponsors and deals alike. If you’re working with a sponsor, be sure that you are asking him/her the right questions. You’ll want to verify that the marketing materials look professional, and ask about investment strategies, fees, and more. You’ll also want to ask your sponsor about his/her experience and background, and don’t be afraid to ask what Ivan calls the tough questions. To this end, Ivan created an entire free video library with more information on vetting a sponsor at ivanbarratteducation.com.
As we’ve mentioned many times, at this point in the cycle, for every deal that BAM finds there are at least 199 others we’ve looked at which haven’t made the cut. Don’t be so excited to land your first deal that you miss red flags that are waving in the breeze. Ivan mentions that you should try to underwrite at least 100 deals to help get what he calls the “fingertip” feel of what makes a deal good compared to what isn’t worth your time. As he’s said before, deals are like buses: if you miss one, another one will be coming along soon!