So, everybody keeps talking about how you go out and purchase new properties, right? New multifamilies. Well, if you’re feeling a little bit stuck, I’m going to talk to you about the five steps you should take in order to go out and buy more investment properties.

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Let’s get back to the 5 steps for buying more properties.

I hear this a lot of time, as someone who is an investor who lives in Europe and actually invests back in a multifamily real estate in the United States. People are constantly asking me, “Billy, how do you actually invest in rental real estate from overeas? Like, what’s your process to go out and buy properties?” I know I’ve talked about some of this before, but I was recently at a real estate investing seminar and this came up. I was talking about this with people afterwards and I’ve had a couple of conversations since then. I thought, well, let me just take a few minutes and share this with you as well. There are five key steps, and I think the number one thing, especially for someone who was a long distance investor, is if you’re looking to invest outside of your hometown or even in your hometown, everything starts with having a very clear idea of your team, specifically talking about the buying process.

There are some other things you need to individually do and be clear about beforehand. In terms of being able to go out and buy the property, and I’m talking about multifamily properties here, is having a strong team comprised of a number of different players. You have everyone from the broker, who is looking at going out to acquire the new property, to the person focused on the legal aspects. Then you have people helping you through your due diligence, who may be types of different inspectors.

You may also have different places where you find your team members. You may find them online and through different tools like Loopnet, MLS or Costar. Ultimately, you need someone who can help you actually identify and source new opportunities once you actually get them under contract. You need someone who can help you go through the step-by-step process that will come into play a little bit later in this discussion.

Ultimately, you need a team to help you, especially on the multi-family properties. The second part of that is actually something that may be a little bit controversial, right? Because a lot of times people ask about how you go out and locate the right property. I guess the way that I’ve always thought about it is the exact same way when I’m talking to my clients in the big multinationals in the B2B sales. Rather than looking for property, it’s really about looking for what problem you’re trying to solve as an investor. If you can go out and locate the problem you are trying to solve that is wrapped up in a property, that gives you a chance to go out and solve it.

You can find properties in many different ways. You may want to go to Loopnet, you may want to go to the MLS, you may want to go to Costar. I’ve also found those are kind of an “on market.” There are other ways where you can really find great problems to solve that are “off market,” meaning they’re not in plain sight of everyone else. You are able to find those different problems to solve because of the relationships and the teams you’ve probably already built. So, that’s the second thing, really looking for different problems to solve. Once you do that, once you’ve been able to find the problem to solve, then you actually have to analyze the property that encompasses the problem you’re trying to solve. So, what are the different steps to analyze the property?

What types of rules are you using? I know when we talk about a single family or smaller multifamily property, people tend to look at the different types of rules. I know I’ve talked in the past about the 1.5% rule or the 1.25% rule, or whatever the case may be. But you’re analyzing the property to quickly make a go/no-go decision. Once you’ve done that, you’ll want to look into some deeper things. You’re looking at the different revenue you have, the different expenses, and operating expenses to be specific. That gives you your net operating income. For those of us who love multifamily properties, we know everything is about net operating income and what we can do to actually increase that.

Can we drive out costs or inefficiencies, and how do we also build the amount of revenue or increase the amount of revenue that’s there? The whole analysis of the property and helping you to understand if this is really a problem that you want to solve actually takes you to step number four. Step number four is, once you figured out that this makes sense for you, it’s now time to make an offer, right? You need to be able to make an offer on the property. And typically what happens with the multifamily is you’re going to put in a letter of intent, which is going through your broker or directly if you have that relationship, and giving your intentions to actually purchase under which types of terms and conditions. You’ll probably go back a couple different times if your letter of intent is not accepted.

Typically, you’re going to get a response, and that can be either a rejection or counteroffer. But you need to put in an offer! 100% of the deals you don’t put an offer on are rejected, right? Then once you make the offer, you’re going to have to negotiate, right? You’re going to have to negotiate because I’ve personally not seen that the first offer was accepted. You need to make sure you’re making an offer and that you’re negotiating. And then lastly, once you’re able to close on the deal, you may also be at a point where you’re like me, right? You’re going out and you’re looking to raise capital so you can do larger deals and bring more people in to help, right?

So once you get the offer, once you’ve gone out and you’ve negotiated, you want to raise more capital and you want to be able to close on the deal to bring that new property into your portfolio. That’s allowing you to go out and solve a problem, and hopefully you’re doing that with a number of investors. So, that’s just trying to make it as simple as possible. You want to go out and you want to make sure you’re building the team, you want to locate a problem you’re willing to solve. You want to analyze the property, you want to make sure you make the offer and negotiate, and then you want to be able to raise the capital and close on the deal.

If you could boil it down, those are the five steps you need to take to go out and bring new properties into your portfolio. I’d love to hear what your comments are. You all know that? I love that. Are you familiar with these five steps? If not, which one may be new? I’d love to hear that from you. As I mentioned before, I’m an investor who lives in Europe and invests back in multifamily properties in the United States. One of the things people ask me all the time is how do I do that? Well, I spelled it out in a very simple to follow eBook. Just click here and I’ll send you a copy of your FREE eBook. Just leave your email and I’ll send that book right out to you. Once again, this is Billy Keels with KeePon Cashflow. That’s my two cents for today, everybody.


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