How I'd Buy My First Apartment Building in 2026 (Start Here)

So my partners and I have built a real estate portfolio of over $550 million in assets under management and without using any of our own money. Now look, we've made a lot of mistakes along the way, but those mistakes are actually how we've been able to help over 600 other investors get their first or next apartment building without making the same mistakes we did. All right, In this video, I am sharing a private training where I covered, knowing everything I know now, the very first step I'd take if I was buying my first apartment building in 2026.

You ready? Let's go. Step 1, write this down: buying criteria. We are about to dive into your, uh, buy box and your core marketing channels. We have a deeper scope, we have, uh, we've detailed it more, uh, and so I'm about to share that with you, but Key thing about your buy box. All right, so some of you already have your buy box nailed down. Some of you are just looking at everything out there. Some of you are just entertaining anything that comes over your desk. And it's very tempting to do as a new investor because you're just like, I just want anything, right? And that, that could be a temptation. But I, I promise you, if you can nail down your buy box to an exact a figure, which I'm about to go through, and get it refined. Think about this: when, when a broker comes across a certain deal and, and you're just doing any deal, who's he going to think of first? Probably not you, because you're just one of thousands of people he's already talked to that may be open to that deal. But if you called that deal specifically, if you said, I'm looking for 20 to 50 units, or if I'm looking for and it's got to be a light value-add or medium value-add, and you're calling out that exact thing that he's looking at right now in that area, right? It's going to be much more chance that he's thinking of you, right? Um, and that's just from a standpoint of we're creating our brand, right? This is what you're trying to do, because every single time— I'm going to go through, I think, on day 4 and show you how different people have scaled And typically right after their first deal, guess what? They're getting calls left and right about all kind of good deals from other people. And it's just a snowball effect because you just put all this work in on the front end. Whenever you've created, uh, whenever you've gotten the first deal, you put in all this work to build your brand and have people know that this is what you're looking for. You've connected with tons of people, you've talked to tons of sellers, and so that brand is what now then snowballs, and you begin to do 2, 3, 4 deals in the same amount of time that you did that one deal. All right, and so I'm going to show you a bunch of case studies how people did that and partnered up to do that, but it starts with narrowing down your buy box. All right, so 20+ units. If you are just starting out, go lower. But I would still say 10+ units, right? I mean, even 20+ units is pretty low, but I would say bare minimum 10+ units. I mean, we did a 16-unit deal that was in our backyard, right? So even for us, it's not that big of a deal if it's right back behind your, behind your house, right? If it's right here or if you've got a team in place that's already running deals in that area. If you have a team in different markets, then obviously you can go lower in those markets. So that's what we're about to share with you about our buy box. Um, because now that we have teams and boots on the ground in different places, we can now expand, right? That's the idea. Um, so we're typically— and I'll break it down in just a second— Georgia, Florida, Alabama, uh, North, South Carolina. We're expanding into the Sun Belt. Um, and, and we'll talk— and then we can even do things— we've done things in New Hampshire, we've done things all over, but it's really just about the boots on the ground, the people that are in that area. Do we have solid boots on the ground people that are able to help us with the deal? And then value-add, light to moderate value-add. You've heard me talk about this all the time, right? So light to moderate, we're not doing heavy renovations, heavy new construction. If you want to do that, you got to talk to Arthur. I'm just kidding. So I mean, look, We're not going to say don't do a deal that's heavy repositioning or heavy value-add, as in full guts, it's under 60% occupied. We're not going to say don't do it. We're just going to say typically it's not the best to focus on, all right, as a newer investor. It's like I get people to ask me, you know, I want to do new construction. It's like, well, have you done before? No. Have you had any experience in new construction? No. Probably not going to work, right? It could work, but you're taking on more risk than you probably should, right, as a newer investor. Now, if you have experience in new construction, you have experience working with that, that kind of deal, and, and not only that, you have the liquidity, right? You have some reserves to hedge for that risk, right? You're— it may be in the question, right? But it's based on your situation, right? If you are wanting to do heavy repositioning, that just means that you have to be willing to, uh, wait longer in, in what's called lag time, right? So from the time the, uh, you, you, the shovel hits the dirt to the time it's built and it's bringing in income, it's called lag time, right? That means that you're vulnerable all through that. If the market crashes, whatever happens, then all of a sudden— that's it. This is what happened, you know, recently in recent years. They couldn't finish the projects. And so that they could make sense of. So it's just going to increase risk if you're doing heavier, you know, guts and renovations. Um, so AB areas, BC properties, all in at 70-80% of stabilized value. Just, yeah, we've already talked about it, you know, you're not looking for Class D areas. If you're in Class D areas, it's not going to appreciate, it's going to be hard to keep up with. And then guess what? You're going to do one deal, you'll be like, you know, I don't want to do any other deals, or I need a year before I do the next deal, right? And you're going to be managing that property, it's going to consume your life, and then that's not conducive to actually growing and scaling. All right, so market location, minimum 25,000, uh, population, prefer 50,000 plus for stronger stability and liquidity. Market fundamentals, Stable or growing population, solid employment base and income trends. All right, regulatory environment, no rent control, reasonable eviction timelines, city-specific acceptable, uh, neighborhood quality, C+, B- or better. All right, avoid high crime or declining submarkets.

Do you want to talk about that? Uh, well, just to, yeah, say, you know, a lot of times people say C-class But there's such thing as C- that should be very difficult. But it really goes to that area, high crime, declining markets. So nothing really to add there. Yeah, 25,000 population is not a horror. It's probably firm, firm. But, you know, we bought deals in 10,000 area populations, and I've seen a lot of deals brought to the group that they can work short term, but what we've experienced is just being able to exit that or sell and refinance. Cap rates are higher, tenant base, tenant demand's lower. So there's a lot of reasons there.

I'd be willing to look at the deal, you know, but it definitely can fight you, right? Better to do no deal than a bad deal. Yeah.

You know, I can determine it about 30 seconds on Google too.

C-minus versus C-plus. All right. Asset criteria. Property class C+ or better, area class C+, B or better, vintage 1980s or newer, pre-1980s, and considered if located in B quality areas. Deferred maintenance. So that means, you know, typically in B areas things can be renovated. What's that? Talking about the holding areas?

Yeah, about the bike surge.

So unit count is 75 to 250. Now there's a caveat there. Um, you know, the reason for that is it supports on-site management and operational efficiency. Okay, less than 75 units considered in markets where we already have a strong presence. Okay, so from our buy box perspective, this is what we're looking at. Occupancy 85 to 95% plus preferred, minimum 75%. Okay, 50 to 75% considered only if offset by strong market fundamentals clear operational upside, conservative underwriting, and then CapEx budget less than or equal to 25% of purchase price. Uh, again, we're steering away from, you know, large heavy renos. Um, basis, we must be less than 80% of stabilized value for CB class. Okay, 80 to 90% for B+ and A-class with strong in-place cash. All right, deal structure and returns. Target IRR at 17 to 22% for our limited partners. Cash on cash strong likelihood of 6 to 8% plus post-stabilization. And then business plan clear, executable value-add strategy, uh, realistic rent premiums and timelines. Um, so any deal outside of this buy box requires explicit approval from REI Capital leadership prior to everything else. All right, everybody clear on that?