Jonathan Cronin walks through five steps to profit in multifamily real estate: buy off-market deals, force appreciation by raising rents and upgrading units, prioritize cash flow, use creative financing and partnerships, and focus on lead generation. An 88-unit deal gained $2M in value in 12 months.
I get asked all the time, what kind of property should I be looking for? Or how do I break into multifamily or how do I scale my current portfolio from where it's at? And I want to answer those questions right now. I am at an 88 unit apartment complex that we just bought here recently, actually 12 months ago. And just the other day, so wild, we got an offer for $2 million more than what we paid for it 12 months ago.
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And we didn't put barely any money in. And terms of capex or improvement. Okay, how do we do that? Well, first I kind of want to talk to you just about the keys that you need to understand. Probably five steps. Okay. Number one, you need to be looking at bigger deals like this. And this isn't too big, right? This isn't something that is, in my opinion, highly competitive in terms of, you know, your big industry titans that are coming in and looking at anything over 100 units. This is 88 units. It's a sweet spot. We found this deal off market and that's going to be key. Number one, off market, large deals protect yourself in terms of a downturn. This is one of the safest vehicles you can be in. Warren Buffett says, if you were to guarantee me a recession next year, in the next few months, I'd still be buying, selling same securities I am now, I'd still be investing in the same things. And so this is one of those assets that I'm telling you, if you're in, you're going to ride out the storms much easier. You can have a lower occupancy rate and still cover the bills, right? In single family, obviously that's not true. So first, number one, buy off market. Large deals get in these big deals, they're safety. But then also, you know, they say you deal in dollars, you work in dollars, you make dollars, you work in thousands, you make thousands, you work in millions, you make millions. So number two, you need to be thinking about forced appreciation above all else. We're not speculating in the game of apartments, okay? We're not hoping for market appreciation. All right? We want to be able to ride this thing out through force appreciation. When we bought this deal, it was $200 per month under market rate. And so we knew that based off several properties in the area that were at or above $200 per month. So all we did was we came in here, we fixed up the property from a standpoint of maintenance and management, and we just improved the property in that perspective. Number three, you need to be thinking about cash flow.
Buy for cash flow.
Don't buy properties that are currently bleeding or in the red. That's going to protect you in terms of a downside, in terms of a downturn in the market. Number four is getting creative. We just had a member in our mastermind just take down a deal and he actually used zero bank financing. We typically teach getting really good relationships with banks, but you should have the community around you that's not just focused on a rigid method. You want to protect your downside, you want to increase your upside. You need to be able to think creatively. So get around people that are doing creative things. This guy didn't use any bank financing. Used all investors, gave all of them 6% preferred returns, gave them 30% ownership. So he participates. He gets to the advantage of having a lower interest in the beginning. And then the investors come up huge. 18, 20, 30% annualized returns once they refinance in a couple years. So think about that. What is a good deal? People ask that all the time. What is a good deal? Something where you can get investors 18 plus percent, sometimes 20, 30. We've even seen 40 now. The market right now may not be allowing for 40 on the limited partner side, but still, what a good deal look like that. Number five, you need to be focused on lead generation. No matter where you're at in your business, I promise you, you focus on marketing, getting more leads, you're going to come out doing really well. Because there are killer deals, actually way better than this deal that made us $2 million in one year. We've actually had way better deals in this and there's way better deals out there than anything we've done. The only difference is increasing lead flow, building out an arm in your business or building out an arm in your operations, or understanding the fundamentals of how to create systems that will increase lead flow. What are the strategies out there that will increase the lead flow in your business? And how do you track the best deals on the market that are actually not on the market but off market? How do you attract the best deals out there in your market that aren't on the market? All right, so I hope that helps. What I want to do now is walk you through exactly how other deals played out for other members that are probably in a very similar situation as you even before you. So hope this helps. Check this out right now. See you soon.
All right, to follow up on that, I moved to my computer because I want to share my screen and share some deals. That's recently closed and recently put under contract in today's market. Let me share my screen. You're going to really love this. One of the members came into our group. He just closed on a deal in New Hampshire, of all places, for $5.7 million. But get this. This guy came to us saying, I only have three to five hours per week to devote to this. Okay, I, I've got two full time jobs. He was active, military, attorney, all kind of different things. And he said, I have three to five hours per week. The other thing, I have no access to capital. I literally zero access to capital. Like, he looked at his bold face and said, I don't have anybody in my network that can put any money in this. Two weeks later, he's putting this under contract. Three months later, he's closing on this thing. $5.7 million deal, 51 unit apartment complex. He said, I expected great things when I joined four months ago, but I had no idea it was going to come so soon. This guy raised $1.7 million. We were able to actually jump in as loan sponsor. We were able to be a part of this deal. Super exciting. We love Stephen. He's doing a great job managing the place. Doing a wonderful job. Chris Caffrey partnered up with two other members in the group. He bought an RV park. Beautiful property. They've got 26 acres. Amazing. They raised, I want to say a couple million or like 1.5 million. Partnered up in today's market. You know, lania went from 0 to 88 units in three months and then went on to raise $35 million in a fund. So if anybody can do it, she can do it. In fact, her story is she lost her job shortly after joining the Mastermind and still did this. As wild as may sound, this is your biggest safety net, is being a part of deals like this. Orlando raised in one of our challenges, raised $4.5 million in just a few days. Ricardo raised $2.5 million. Ryan McKee, this is just a post. He just shared 500k committed off Grandview on one phone call. I just got off the phone with him the other day. He actually has raised $4.5 million now since this post. And he's taken down a major apartment complex. He is actually taking down the deal that is not using any bank finance. It's using just investors. 6%. It's wild. I just wanted to show you that because you can do it.
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If there's anything truer, today is the day. This is the market to do it. In all you need to do is the things I just shared with you. Get in there, play the game. Get into multifamily. We're rooting for you.
