1 00:00:00,100 --> 00:00:01,933 so basically what I wanna do is 2 00:00:02,100 --> 00:00:04,133 for all the people that are interested in real estate 3 00:00:04,133 --> 00:00:07,766 um I wanna like create these videos for you as well as for myself 4 00:00:07,766 --> 00:00:09,966 so I don't forget them cause I have it 5 00:00:10,166 --> 00:00:11,400 tendency should forget things 6 00:00:11,400 --> 00:00:15,666 so as of most recent I'm reading about commercial real estate 7 00:00:15,666 --> 00:00:18,666 so I'm reading Brandon Turner's book 8 00:00:19,666 --> 00:00:20,600 The Multi Millionaire 9 00:00:20,600 --> 00:00:21,966 volume 2 see 10 00:00:21,966 --> 00:00:25,100 so the Multi Family Millionaire volume 2 11 00:00:25,300 --> 00:00:27,766 create generation of wealth by investing in large 12 00:00:27,766 --> 00:00:32,366 multi family real estate the Multi Family Millionaire 2 13 00:00:32,666 --> 00:00:35,533 it's written by Brian Murray and Brandon Turner 14 00:00:35,566 --> 00:00:37,833 I believe this part of the book 15 00:00:37,833 --> 00:00:40,333 the majority of it was written by Brian Murray 16 00:00:40,666 --> 00:00:43,833 and yeah so I'm reading this one right now 17 00:00:43,833 --> 00:00:45,166 and I would like to take you through 18 00:00:45,166 --> 00:00:47,800 the different chapters and things that I've been learning 19 00:00:47,800 --> 00:00:50,500 so we'll start with 20 00:00:50,900 --> 00:00:52,966 okay so 21 00:00:52,966 --> 00:00:55,166 there's different types of 22 00:00:55,166 --> 00:00:58,166 investment properties that you can go after in commercial 23 00:00:58,166 --> 00:01:01,100 so you gotta figure out exactly which ones you wanna do 24 00:01:01,366 --> 00:01:03,300 this is specifically towards multifamily 25 00:01:03,300 --> 00:01:06,500 and in that section there's other types as well 26 00:01:06,500 --> 00:01:08,566 so the first thing that you need to do is you have CCC 27 00:01:08,566 --> 00:01:12,600 which is called CCC which is for crystal clear criteria 28 00:01:12,600 --> 00:01:13,800 you gotta know exactly 29 00:01:13,800 --> 00:01:16,666 the areas of things that you're interested in investing in 30 00:01:16,766 --> 00:01:19,566 and I'm gonna give to you 31 00:01:19,566 --> 00:01:22,433 what is outlined in the book for the different types that are there 32 00:01:22,600 --> 00:01:25,833 and obviously there are multiple different types and stuff right 33 00:01:25,833 --> 00:01:29,600 so it's kind of just like what you're interested in doing 34 00:01:29,600 --> 00:01:32,833 so there's high rises mid rises 35 00:01:32,833 --> 00:01:34,733 so high rise is anything that is nine floors with an 36 00:01:34,733 --> 00:01:34,800 so high rise is anything that is nine floors with an 37 00:01:34,800 --> 00:01:37,066 9 or more floors with an elevator 38 00:01:37,066 --> 00:01:41,266 mid rise is anything with an elevator in like an urban area 39 00:01:41,266 --> 00:01:42,900 usually less than nine floors 40 00:01:43,400 --> 00:01:45,166 garden style is one two or 3 story apartments uh 41 00:01:47,966 --> 00:01:53,566 in that have like a garden like setting in a suburban or rural 42 00:01:53,633 --> 00:01:56,533 locations so they may not have an elevator 43 00:01:56,666 --> 00:01:59,833 you see a lot of these in Sacramento 44 00:01:59,833 --> 00:02:03,266 like if you go like towards Folsom or anywhere out there 45 00:02:03,366 --> 00:02:06,366 another types of like apartment complexes 46 00:02:06,366 --> 00:02:09,966 that's what they'll have and they could have set number of units 47 00:02:09,966 --> 00:02:11,400 even in Austin when I was living there 48 00:02:11,400 --> 00:02:16,433 that was technically a garden style complex and then walk up 49 00:02:16,433 --> 00:02:19,766 there's four to six story buildings without an elevator 50 00:02:19,766 --> 00:02:22,366 so if there's no elevator and there's four to six stories 51 00:02:22,366 --> 00:02:23,533 it's called a walk up 52 00:02:23,666 --> 00:02:25,266 manufactured housing communities 53 00:02:25,266 --> 00:02:27,566 so we're talking mobile home parks 54 00:02:27,766 --> 00:02:33,633 Brandon Turner has built and created a lot of wealth from 55 00:02:33,866 --> 00:02:35,500 from these types of communities 56 00:02:35,500 --> 00:02:39,966 there's also special purpose housing like student housing 57 00:02:39,966 --> 00:02:41,700 senior housing and subsidized housing 58 00:02:41,700 --> 00:02:44,766 so subsidized being like low income 59 00:02:45,166 --> 00:02:49,000 senior housing meaning like catering specifically to the elderly 60 00:02:49,000 --> 00:02:50,400 and then student housing of course 61 00:02:50,400 --> 00:02:52,900 like usually these are by like colleges and stuff like that 62 00:02:53,033 --> 00:02:54,733 there's also different there's four 63 00:02:54,966 --> 00:02:58,500 types of classifications that these multi family properties can be 64 00:02:58,500 --> 00:03:02,200 you have Class a which is the highest quality constructed 65 00:03:02,400 --> 00:03:04,700 within the last 10 years 66 00:03:05,000 --> 00:03:07,033 the most attractive locations present will 67 00:03:08,633 --> 00:03:11,166 and command high rates generally 68 00:03:11,300 --> 00:03:12,466 and there's Class B 69 00:03:12,600 --> 00:03:15,633 likely to have been constructed in the past 20 years 70 00:03:15,633 --> 00:03:19,033 good quality with a deferred maintanence 71 00:03:19,033 --> 00:03:21,200 and both a and B this is important 72 00:03:21,200 --> 00:03:22,700 both a and b 73 00:03:22,700 --> 00:03:26,800 generally are invested by larger institutional buyers and lenders 74 00:03:26,800 --> 00:03:27,600 so 75 00:03:28,100 --> 00:03:29,366 you know you might have to go to them 76 00:03:29,366 --> 00:03:32,200 if you want to acquire these types of properties 77 00:03:32,400 --> 00:03:33,933 if you're doing stuff 78 00:03:33,966 --> 00:03:36,000 you know without working with large institutions 79 00:03:36,000 --> 00:03:38,000 and class C and d might be better 80 00:03:38,000 --> 00:03:40,933 so what that looks like is for class C 81 00:03:40,966 --> 00:03:46,000 you have older with more limited or dated amenities 82 00:03:46,566 --> 00:03:50,966 finished fixtures and applications are probably outdated 83 00:03:50,966 --> 00:03:52,066 or often dated 84 00:03:52,100 --> 00:03:53,666 more challenging to finance 85 00:03:53,666 --> 00:03:56,066 but they also tend to offer more opportunity 86 00:03:56,433 --> 00:03:58,033 to the value of improvements right 87 00:03:58,033 --> 00:03:59,833 so what you're looking at is like it's gonna be 88 00:03:59,833 --> 00:04:01,333 it might be more difficult to get funding 89 00:04:01,400 --> 00:04:03,566 your project might have to have more there 90 00:04:03,566 --> 00:04:06,033 and you might have to explain a bit more about like 91 00:04:06,033 --> 00:04:07,600 how you're going to do this 92 00:04:07,600 --> 00:04:10,566 and have your strong team to be able to back you up on this 93 00:04:11,433 --> 00:04:13,633 and maybe the rates will be adjusted for the risk 94 00:04:13,633 --> 00:04:14,100 because it's more risky to 95 00:04:15,300 --> 00:04:18,100 to be able to get that financing for it however 96 00:04:18,100 --> 00:04:21,333 if you can terrific 97 00:04:21,833 --> 00:04:24,433 it all just you just have to play with the numbers 98 00:04:24,433 --> 00:04:29,900 class d older and the less desired locations as well 99 00:04:30,033 --> 00:04:33,266 distress due to combination of low occupancy 100 00:04:33,433 --> 00:04:34,266 crime rate 101 00:04:34,266 --> 00:04:37,266 and overall just bad management could be the thing as well 102 00:04:37,266 --> 00:04:39,200 so these are more challenging the finance 103 00:04:39,200 --> 00:04:42,200 but also they tend to offer the most opportunity for value 104 00:04:42,200 --> 00:04:43,833 add so if you have bad management 105 00:04:43,833 --> 00:04:47,766 you can bring on your own a new property management team 106 00:04:47,766 --> 00:04:52,966 if there's low occupancy you can bring more people in there 107 00:04:53,833 --> 00:04:57,200 there's ways that you can add more value to that specific area 108 00:04:57,633 --> 00:04:59,400 go with 109 00:04:59,733 --> 00:05:01,733 partners or at least people that know 110 00:05:01,733 --> 00:05:03,866 and have worked in these types of projects before 111 00:05:03,866 --> 00:05:05,900 if you're taking people and wanting to say hey 112 00:05:05,900 --> 00:05:08,300 let's go from Class a to class d stuff 113 00:05:08,300 --> 00:05:11,333 they might not know exactly that smooth transition 114 00:05:11,333 --> 00:05:13,933 you probably wanna have people have done some class d types of 115 00:05:14,166 --> 00:05:17,533 investment properties under their belt and work with them 116 00:05:18,266 --> 00:05:21,166 now here's some pricing so Class a and B usually finance 117 00:05:21,166 --> 00:05:25,533 you can usually get finance for up to 75 to 80% of the Loan-To-Value 118 00:05:25,533 --> 00:05:29,700 so simple example let's assume that you have access to 2.3 mil 119 00:05:30,333 --> 00:05:37,833 and 30,000 in closing cost plus 270,000 for post closing cash needed 120 00:05:37,866 --> 00:05:44,833 so it's total of 300,000 now 2.3 million - 300,000 equals two million 121 00:05:44,833 --> 00:05:49,466 so you take that 2 million and that cut that takes over the 122 00:05:49,466 --> 00:05:53,666 20% that you're gonna need for the down payment 123 00:05:53,666 --> 00:05:57,066 you're able to take a loan for anywhere between 75 to 80% 124 00:05:57,066 --> 00:06:00,800 so that 20% is 2 million so what's 100% 125 00:06:00,800 --> 00:06:01,833 that's 10 million 126 00:06:01,833 --> 00:06:05,366 so you're gonna be looking for properties around the 10 million marks 127 00:06:05,366 --> 00:06:08,033 that could be 6 million 12 million for class C&D 128 00:06:09,066 --> 00:06:11,733 the same amount of cash that you have will go less 129 00:06:11,733 --> 00:06:13,766 due to the additional risk factor 130 00:06:13,766 --> 00:06:16,433 so instead of going from 6 to 12 million in your range 131 00:06:16,433 --> 00:06:19,166 you might be going down to 5 to 10 million 132 00:06:20,066 --> 00:06:20,866 now 133 00:06:21,400 --> 00:06:22,266 the sizes so let's say that you're looking for classy properties 134 00:06:24,133 --> 00:06:27,833 without an apartment priced at 8 million in the market value 135 00:06:27,833 --> 00:06:33,266 where you have an average price per unit of class C at 80,000 136 00:06:33,666 --> 00:06:33,966 so 137 00:06:33,966 --> 00:06:38,033 you can calculate the amount of units that you would be looking for 138 00:06:38,033 --> 00:06:41,000 once you have the amount of value that you're able to raise 139 00:06:41,000 --> 00:06:42,866 and the lending amount right 140 00:06:42,866 --> 00:06:43,066 so once you have those numbers 141 00:06:44,166 --> 00:06:47,733 you can then work backwards so let's say for Class C you have 142 00:06:47,766 --> 00:06:50,433 let's say you want your your markets 8 mill right 143 00:06:50,433 --> 00:06:53,633 you want an eight million dollar property 144 00:06:53,633 --> 00:06:58,566 and you know that for Class C in your area is $80,000 per unit 145 00:06:58,666 --> 00:07:04,666 you know now that if you divide 8 million by 80,000 146 00:07:04,666 --> 00:07:07,400 you're looking at 100 units that you're looking for 147 00:07:07,400 --> 00:07:09,433 so you're looking for 100 unit properties 148 00:07:09,433 --> 00:07:10,600 now you can go on and say okay 149 00:07:10,600 --> 00:07:14,733 where are the hundred unit properties in my area for the Class C right 150 00:07:15,766 --> 00:07:16,400 occupancy 151 00:07:16,400 --> 00:07:20,500 so most learners like to see at least a minimum of 85% occupancy 152 00:07:20,733 --> 00:07:22,000 once you drop below that 153 00:07:22,000 --> 00:07:24,366 your borrowing options to get a little bit more difficult 154 00:07:24,366 --> 00:07:26,133 and you're taking on additional risk 155 00:07:26,200 --> 00:07:29,033 yeah so Brian Murray in the book he talks about how he 156 00:07:29,033 --> 00:07:29,833 they had a lower occupancy when they were going through the process um 157 00:07:34,333 --> 00:07:37,000 and it was more difficult to get loans and then they were 158 00:07:37,000 --> 00:07:42,366 they wanted to add the occupancy so that they get more people 159 00:07:43,600 --> 00:07:43,700 and then do the appraisal 160 00:07:43,700 --> 00:07:46,633 so that way the loan comes in with that that 161 00:07:46,633 --> 00:07:47,400 that additional thing I believe that's what it said 162 00:07:47,866 --> 00:07:50,266 so target returns how much you're looking to make back 163 00:07:50,266 --> 00:07:52,266 so usually you don't discuss this to the brokers 164 00:07:52,266 --> 00:07:54,033 or anyone else helping you find the deal 165 00:07:54,033 --> 00:07:56,966 the amount of returns only usually stays with the investors 166 00:07:56,966 --> 00:07:59,166 and you speak to the investors of what those returns are 167 00:07:59,166 --> 00:07:59,833 if I would assume this reason is 168 00:07:59,833 --> 00:08:02,733 because if you start talking to the brokers about those types of 169 00:08:03,266 --> 00:08:05,033 the money that you've been making on these deals 170 00:08:05,066 --> 00:08:06,500 then they're gonna negotiate like oh 171 00:08:06,500 --> 00:08:07,333 if you're making that much 172 00:08:07,333 --> 00:08:09,866 then you know how about you give us this much or whatever the case 173 00:08:09,866 --> 00:08:11,600 or they'll know how to shop it and sell 174 00:08:11,600 --> 00:08:12,900 sell the deal somewhere else 175 00:08:14,000 --> 00:08:16,933 all right so sample criteria 176 00:08:16,933 --> 00:08:19,433 so let's say you have a location right 177 00:08:19,433 --> 00:08:23,633 you want to go primary and secondary cities throughout the southeast 178 00:08:23,633 --> 00:08:26,266 with populations trending upwards population 179 00:08:26,266 --> 00:08:28,700 you have growth in the area type of class 180 00:08:28,700 --> 00:08:30,566 you want class C garden style 181 00:08:30,633 --> 00:08:35,833 with or walk up workforce housing with reposition opportunities 182 00:08:35,833 --> 00:08:39,666 age type is 1980s construction or newer 183 00:08:39,666 --> 00:08:42,733 but will consider others on the case by case basis 184 00:08:42,800 --> 00:08:45,133 and your price point is a 5 to 12 million 185 00:08:45,133 --> 00:08:48,733 with 1.5 million to 3 million in funds provided 186 00:08:48,733 --> 00:08:51,266 that's for renovations and everything 187 00:08:51,266 --> 00:08:55,366 100 units or larger is what you're looking for a cap rate market rates 188 00:08:55,433 --> 00:08:57,133 and the value add that you're looking for 189 00:08:57,133 --> 00:08:59,333 looking to require assets 190 00:08:59,433 --> 00:09:02,366 and opportunities to value add through physical improvement 191 00:09:02,366 --> 00:09:04,566 or better property management 192 00:09:04,566 --> 00:09:06,666 so Brian actually goes into 193 00:09:07,266 --> 00:09:08,733 to the specific deal that he did 194 00:09:08,733 --> 00:09:11,633 where the property management was terrible 195 00:09:11,633 --> 00:09:13,066 they were actually like 196 00:09:13,066 --> 00:09:14,933 you know stealing and siphoning stuff 197 00:09:14,933 --> 00:09:15,366 and like 198 00:09:15,366 --> 00:09:18,366 they would actually quote contractors more and then pocket the money 199 00:09:18,366 --> 00:09:19,633 like things were like really bad 200 00:09:19,633 --> 00:09:21,066 so 201 00:09:21,066 --> 00:09:22,133 one of the first things that he did 202 00:09:22,133 --> 00:09:23,333 once he had it under closing 203 00:09:23,333 --> 00:09:26,600 is that he got rid of the property management company 204 00:09:26,766 --> 00:09:29,166 and then he worked with a newer one 205 00:09:29,166 --> 00:09:31,433 and then they also helped get better 206 00:09:31,433 --> 00:09:34,600 vendors and stuff like that to help them with the property and 207 00:09:34,700 --> 00:09:35,933 and just by doing that like 208 00:09:35,933 --> 00:09:40,366 it saves significantly on the cost of theft that was going on 209 00:09:40,466 --> 00:09:41,966 just there 210 00:09:41,966 --> 00:09:44,133 and as far as physical improvements and stuff like that 211 00:09:44,133 --> 00:09:45,466 usually during that period 212 00:09:45,766 --> 00:09:47,166 you could do some renovations as well 213 00:09:47,166 --> 00:09:50,833 so yeah and I think it's important to add like 214 00:09:50,833 --> 00:09:53,300 there's different types of ways that you can like go about these 215 00:09:53,300 --> 00:09:54,466 so like 216 00:09:54,466 --> 00:09:56,100 you know we're talking specifically multi family 217 00:09:56,100 --> 00:09:57,133 but like you can even like target 218 00:09:57,133 --> 00:09:58,366 like motels or stuff like that 219 00:09:58,366 --> 00:10:00,133 if it's like a one bedroom or two bedroom and like 220 00:10:00,133 --> 00:10:02,633 just turn them into apartment complexes and stuff like that 221 00:10:02,633 --> 00:10:03,400 I've seen like 222 00:10:03,400 --> 00:10:06,000 areas and different types of cities where people 223 00:10:06,200 --> 00:10:08,633 have made apartment units out of like 224 00:10:08,633 --> 00:10:10,900 something that was originally like a motel 225 00:10:10,900 --> 00:10:12,600 right so 226 00:10:12,600 --> 00:10:14,800 you can do these types of things where you're like shifting like 227 00:10:14,800 --> 00:10:15,900 oh we're taking a Motel 6 228 00:10:15,900 --> 00:10:17,966 then making it into an apartment complex 229 00:10:17,966 --> 00:10:20,366 right so those could be big value ads 230 00:10:20,366 --> 00:10:22,100 you have to try to like learn to see like 231 00:10:22,100 --> 00:10:25,166 what is that amount that you can make on that transition 232 00:10:25,166 --> 00:10:26,966 and what are the key things to look for 233 00:10:26,966 --> 00:10:28,433 and ideally while you're looking there 234 00:10:28,433 --> 00:10:30,766 figure out who's doing it and seeing like hey 235 00:10:30,900 --> 00:10:33,166 if they're trying to partner or work on 236 00:10:33,166 --> 00:10:34,466 on these types of opportunities 237 00:10:34,466 --> 00:10:36,700 that's my 238 00:10:36,700 --> 00:10:37,833 that's my thinking about this 239 00:10:37,833 --> 00:10:40,400 like a lot of people they want to work with you 240 00:10:40,400 --> 00:10:42,700 and people are generally happy to speak with you 241 00:10:42,700 --> 00:10:44,066 so I recommend doing that 242 00:10:44,633 --> 00:10:46,400 so that's the first 243 00:10:46,400 --> 00:10:49,533 chapter of this book and I'll go into more chapters in a bit 244 00:10:50,100 --> 00:10:50,900 thanks