In this episode, host Nico dives into the most common mistakes new multifamily investors make and provides actionable strategies to avoid them. Topics include managing emotions versus numbers, accurately estimating expenses like taxes, insurance, and maintenance, the critical role of thorough due diligence, building the right team, and mastering the lending process. With personal stories and lessons learned, Nico shares valuable insights to help you confidently grow your multifamily portfolio.

Timestamps:
- 00:00 Introduction: Avoiding Costly Mistakes in Multifamily Deals
- 00:50 The Importance of Emotional Detachment
- 03:18 Underestimating Expenses: A Common Pitfall
- 06:44 Due Diligence: Non-Negotiable Steps
- 10:26 Building the Right Team
- 13:35 Starting Small and Learning Fast
- 14:37 Recap and Final Thoughts
- 15:26 Bonus Tips on Lending
- 16:43 Conclusion: Keep Sharpening Those Axes

Tune in to learn how to avoid costly mistakes and set yourself up for long-term success in multifamily investing!

In this episode of the Small Axe Podcast, Nico shares his insights on acquiring multifamily properties without needing a huge upfront investment. Whether you’re a first-time buyer or an experienced investor, Nico dives deep into both traditional and creative financing strategies to help you get into the apartment complex game.

Key Takeaways:

1. Getting Started with Traditional Financing

- Learn about commercial loans for multifamily properties, typically available for buildings with five or more units.

- Discover why most first-time buyers begin with local banks or credit unions that understand the area and asset class.

- Nico explains loan options such as 20-30 year amortizations, interest-only payments, and how to shop around for the best rates.

2. Creative Financing Options

- If traditional banks don’t work out, explore creative strategies like seller financing, where the seller holds the note.

- Hear examples of how Nico and other investors negotiate terms like down payments, interest rates, and even deferred payments with seller financing.

3. Alternative Funding Sources for Down Payments

- If you don’t have the required down payment, there are several ways to raise it, including joint ventures, partnerships, retirement accounts, and tapping into home equity.

- Understand how syndications work, where you can raise capital from limited partners to fund a portion or even the entire deal.

4. Exploring Non-Traditional Financing Techniques

- Find out about master lease agreements, loan assumptions, and the benefits and risks of using these methods to structure a deal when traditional bank loans aren’t feasible.

5. Joint Ventures and Partnerships

- Nico discusses the importance of partnering with people who align with your goals and values, particularly in joint ventures where all parties are active in the deal.

Resources Mentioned:

- *Creative Cash* by Bill Ham – A book on structuring deals creatively, which helped Nico understand and apply creative financing strategies in multifamily investing.

Quotes:

- "It’s possible to get into your first apartment complex without a ton of cash if you’re open to exploring different financing methods."

- "When structuring a deal, make sure to align with your partners and carefully consider each financing option."

Action Steps:

1. Evaluate your available financing options for multifamily investing, starting with traditional bank loans.

2. Research creative financing techniques like seller financing and master lease agreements.

3. Think about potential partnerships or joint ventures for raising a down payment.

4. Start building relationships with community banks and credit unions for better financing terms.

Want More Help?

Visit www.smallaxecommunities.com to listen to more episodes of the *Small Axe Podcast* and explore resources that can help you sharpen your multifamily investing skills!

In this episode, Nico from the Small Axe Communities explains the various ways multifamily investors, specifically General Partners (GP) and Limited Partners (LP), get paid. Nico discusses the income sources for GPs, including acquisition fees, asset management fees, capital event fees, and disposition fees, offering practical insights from personal experiences. The episode also covers how LPs earn returns based on their investments, typically receiving an 8% preferred annual return, paid monthly, prior to any GP profits. Additionally, it touches on profit splits when returns exceed the preferred rate and the structure of 'waterfall' payouts. Listeners are encouraged to understand deal structures thoroughly and to reach out for further advice, concluding with a call to action for sharing and reviewing the show.

00:00 Introduction to Multifamily Investing

00:41 Understanding General Partnerships

01:08 The Role of Acquisition Fees

01:58 Justifying Acquisition Fees

04:02 Asset Management Fees Explained

05:01 Challenges in Asset Management

06:03 General Partners' Compensation Breakdown

08:14 Limited Partners' Earnings Explained

09:42 Preferred Returns and Incentives

11:22 Waterfall Structures in Deals

11:50 Final Thoughts and Contact Information

12:00 Closing Remarks and Gratitude

In this episode, Nico from Small Axe Communities discusses strategies to secure a multifamily real estate deal. He emphasizes three key elements: money, expertise, and network. Nico explains how having capital simplifies the process, but if you lack funds, you must have the expertise or a robust network to find and manage deals. He addresses various roles within a real estate team, such as asset managers, capital raisers, and deal finders, and underscores the importance of aligning skill sets with team needs. Nico also highlights the value of building long-term relationships and maintaining a collaborative attitude to succeed in multifamily real estate ventures. Finally, he encourages listeners to share this valuable information and offers guidance to those interested in joining a partnership.

00:00 Introduction and Show Purpose

00:41 Key Elements for Getting a Deal

01:09 Importance of Money, Expertise, and Network

01:53 Roles and Expertise in Multifamily Projects

02:49 Building Your Value in a Team

03:38 Case Study: Partner Expertise

04:26 Building Trust in Partnerships

04:56 Identifying Your Expertise

05:21 The Power of Deal Finding

05:52 Negotiating and Team Building

06:19 Key Traits for Success

07:58 Final Thoughts and Encouragement

In this episode, Nico from the Small Axe Communities breaks down the essentials of passive investing, placing a strong emphasis on multifamily real estate syndications. He elaborates on the different roles within syndications, such as limited and general partners, and highlights the importance of a solid grasp of real estate fundamentals. The narrative covers strategic steps for becoming a successful passive investor, including the recommended capital requirements and long-term growth strategies. Additionally, the episode explores the broader context of various passive investments—like stocks, bonds, and crypto—emphasizing the consistent financial growth achievable through diversified portfolios. Listeners are encouraged to persistently refine their investment approaches, thoroughly vet opportunities, and seek expert advice to make informed decisions. The discussion concludes with a call to action for continuous learning and active engagement in building investment knowledge.

00:00 Introduction to Passive Investing

00:44 Understanding Passive Real Estate Investing

02:00 Roles in Real Estate Syndication

03:41 Essential Knowledge for Passive Investors

04:57 Financial Requirements for Passive Investing

05:57 Setting Passive Investment Goals

07:50 Vetting and Monitoring Investments

08:43 The Reality of Passive Investment Returns

09:22 Long-Term Investment Goals

09:46 The Importance of Keeping Your Money Active

12:09 Understanding Passive vs. Active Investing

13:33 The Necessity of Passive Investing

15:09 Final Thoughts and Recommendations

In this episode, Nico from the Small Axe community discusses how to structure partnerships for new multifamily property deals. Whether deciding between a joint venture or a syndication, the structure often involves a standard equity split, typically 70% for investors and 30% for management. Nico provides insight into how these allocations work, including a detailed breakdown of the equity split bucket system and the importance of each role, such as asset management and capital raising. Nico also emphasizes the necessity of precise legal documents and operating agreements tailored to each deal to safeguard against potential issues. An equity split spreadsheet is available by request to help implement these strategies effectively.

00:00 Introduction and Purpose of the Episode

00:41 Starting the Partnership Discussion

01:25 Equity Split and Partnership Structure

04:40 Detailed Breakdown of Equity Buckets

07:01 Adjusting Buckets Based on Deal Specifics

14:23 Legal Documents and Final Thoughts

16:36 Conclusion and Call to Action

Five Steps to Owning 194 Apartments in 12 Months

In this episode, Nico of the Small Axe community shares his journey from owning no apartments to closing on a 194-unit apartment complex within 12 months. He provides a detailed five-step framework to achieve similar success. The steps include realizing the importance of teamwork, continuous education, finding mentors, relentless networking, and taking action. Nico emphasizes the necessity of being genuine during networking and the value of taking risks to gain significant rewards. He also recounts his experiences and the key role of mentorship in his real estate journey.

00:00 Introduction: From Zero to 194 Apartments

00:59 Step 1: Realization - You Can't Do It Alone

03:19 Step 2: Education - The Key to Success

04:57 Step 3: Mentorship - Finding the Right Guidance

07:06 Step 4: Networking - Building Your Team

10:55 Step 5: Taking Action - Making It Happen

14:47 Conclusion: Recap and Final Thoughts

In this episode, Nico provides a comprehensive guide for deal finders and hunters at all experience levels to acquire multifamily properties. Key topics include the importance of loving the search, narrowing down your market and deal criteria, utilizing various resources like LoopNet, MLS, Crexi, and establishing broker relationships. Additionally, the episode covers direct-to-seller strategies, cold calling, leveraging partnerships, attending meetups, and maintaining a consistent, positive communication approach with brokers to ensure success in securing deals.

00:00 Introduction: Finding Your First Multifamily Deal

00:42 The Love for Deal Hunting

01:14 Choosing and Researching Your Market

02:33 Searching for Deals: MLS, LoopNet, and More

04:22 Solidifying Your Deal Criteria

08:23 Building Broker Relationships

09:44 Direct to Seller Strategies

11:20 Networking and Community Involvement

16:40 The Importance of Consistent Communication

19:05 Final Tips and Encouragement