Today’s REI Classroom Lesson

Michael Blank goes over how getting through your first multi-family deal can jumpstart your success and give you the confidence you need to do bigger deals in the future.

REI Classroom Summary

By not giving up and pushing through your first deal, many have the want and drive to do more deals with more units.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Michael: Hey there and welcome to the REI Classroom. My name is Michael Blank and I’ll be your instructor today. Today I’m going to talk about how you can change your life with one multi-family deal.
Mike: This REI Classroom real estate lesson is sponsored by
Michael: So maybe you have ultimate end goals like quitting your job, or working for yourself, securing a retirement, or just leaving a legacy for your children. And maybe you’ve decided the best and fastest way to achieve those goals is by transitioning from single-family house investing to multi-family investing. Now, I would concur with that choice because that’s what I do and that’s what I teach others to do, but this video is not about the pros and cons of multi-family investing. What I want to focus on is the choice after that.
So you’ve decided this is a good idea and you’re going down and maybe you determined that in order to get $5,000 in passive income per month you need to control, let’s say, 100-plus units or whatever that is. So instead of getting overwhelmed at this thought, and a lot of people do, they go, “Oh my gosh. In order to achieve my goals, I’m going to have to control 100 units.” And they get so overwhelmed that they don’t even start. So I want to address that and the way I want to address that is that I want you to focus on your very first deal. So I know the end game is whatever it is, 100 units or retirement, and you have five, six, seven years to do that. I want you to focus only on that first deal.
Here’s why this is so important. So first of all, if you focus on that first deal and you do that first deal. Let’s say you do that first deal. Here’s what that will do for you. First of all, it proves to you that the whole apartment investing thing works and that you can actually do it. You also, more importantly, have an experience and track record, which is useful in a variety of different ways. Number one is you’re going to be taken seriously by others. You’re going to have references. You’re probably going to have a small number of investors if you raise some money and they will likely invest with you again or refer you to others. And you probably have a nice broker network in place where you have deals coming in. So it may have taken a long time to do that first deal, but I can guarantee you’ll have a pipeline for that second and third deal.
So all this combined makes your second deal much, much easier. And that’s why I want you to focus like a laser on that first deal. Let’s talk about what that first deal should look like. So working backwards, let’s say your goal is $5,000 per month passive income and you’ve decided you need to control 100 apartment buildings. So, therefore, your first deal should be between, let’s say, 10 and 30 units. So let’s say you focus on a . . . I’ll make it up, a 20-unit apartment building deal and let’s say it takes you a really long time to do that. I’m even talking about a long time, like a year. Gosh, let it take two years. Let it take really long like two years, okay?
So it’s definitely not in the instant gratification category or the get rich time frame. And it’s an aggravating long time for the time it takes to get this done. But let’s say you actually do this 20-unit whatever deal after 18 to 24 months and you’ve got, I don’t know, $1,500 in passive income, which is only like 20% towards your goal or 25%. It’s aggravatingly minimal. But here’s the truth of it. You’re actually more than 25% there. Here’s why.
Now, chances are, you already have other deals in your pipeline. So you’re not just 25% there, you’re actually much closer there. And those second deals that you have in your pipeline are going to be much bigger than 20 units. Because I can tell you from experience and working with others, once you get into the weeds on whatever you’re looking for, the 20 units, your comfort zone expands quickly actually. And you’re going to be looking at 50 units down the road. And most likely, you’ll close on your second deal within a very short period of time of closing on that first deal. I see it over and over again. The people I have in my podcast, the trajectory is very similar. It takes an extraordinarily long time to get that first deal done and all of a sudden, the floodgates open.
So even though it took you forever to do that first deal, once you did, the floodgates opened and your life is never going to be the same. And most people, frankly, give up long before then or just before their success. So do you see how critical your first deal is? Does it make sense not to be overwhelmed by the end game? And just focus on that first goal, which is your first deal. I think that’s the key to success in multi-family investing. So I hope that was helpful. I’ll catch you on the next episode.
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